Rana/20081 Economic Diplomacy--Basics Kishan S Rana
Rana/ Role of Economics It lies at the center of diplomacy. This was always true in the historical past (e.g the Amarna archives of Middle Egypt BC). Today economics often determines relations (examples: US-China, US-India) FTAs, CECAs, and accords set the framework
Rana/ Who Handles Economic Work? UNIFIED – Australia, Canada, Sweden. PART-UNIFIED – UK, Japan (only for aid). THIRD AGENCY – Singapore. COMPETITION – India, Mexico, Thailand. MFA ABDICATION – China, Germany. There are other variations.
Rana/ (Cont) Stages Progressive stages, exist concurrently Salesmanship: Pushing exports, attracting FDI, focus on market entry, brand credibility, self- introduction Networking: Building local connections, links between counterpart agencies, public diplomacy, broad outreach Regulation: Negotiating accords on DTA, investment protection, trade preferences, FTAs & RTAs; enforcement
Rana/ (Cont) Advancement of national economic interest is at core of external relations Turf battles leave only losers Winners practice ‘whole of government’ methods, with unified policy direction Embassies abroad are essential action tools High opportunity cost of embassy under-use
Rana/ Country Promotion & Image Need to show country brand in ‘powerful, attractive and differentiated way’; but must be rooted in reality Image affects all aspects of external dip Many pursue branding and re-branding Many examples, results not always clear
Rana/ Continued ‘Brand audit’ establishes base line, need honesty, objectivity Public-private partnerships work best, both in home and target country Using local partners adds to credibility Should guard against over-marketing
Rana/ Continued ‘India Brand Equity Fund’ is innovative PPP device -- in comparison with other countries Perhaps need review to optimize it further Some integration with tourism marketing also worthwhile Indian media have produced innovative models of their own
Rana/ Promotion Methods Image “audit”. Using both wide catchment creation and pursuit of specific targets. Using locals + “success stories”. Outreach, integrating all diplomatic sectors, from culture to consular services. Mobilizing regional approach.
Rana/ FDI Promotion Important study by the World Bank in 1991, updated in 2000, on different methods used by countries, and the “success formula”. Main conclusion: the best method has been targeted pursuit of selected targets + steady persuasion. We can call this “hunt & rifle shot” method. Experience of Singapore’s EDB, Israel, Ireland
Rana/ Continued Embassies SALESMANSHIP Task Reaching out to targets Build ally networks Use inter-connections Link trade & investment + S&T Success stories Headquarters REGULATION Task Rule-based vs. case- by-case Global competitiveness Motivate home actors Pre-negotiation work Support embassies
Rana/ Trade Promotion METHOD Analyze import basket Focus on new products & markets Motivate institutional contact Facilitate delegations Use trade fairs ALSO CONSIDER Resolve trade disputes Help two-way trade Integrate eco dip with other activities Set own targets Host ‘buyer-seller’ meets at embassy
Rana/ FTAs Asia-Pacific: total of 77 FTAs signed, 65 under negotiation, at bilateral level All FTAs involve some pain; key issue is net gain, seen in dynamic manner FTA negotiations hinge on preparation, anticipation of partner’s perspective, interests Harvard Negotiation method
Rana/ Continued South Asia is the world’s least integrated region Analyze Sri Lanka FTA lessons Take long view of national interests, moving beyond today’s concerns Painless FTAs do not exist Need integrated view of our objectives in target markets
Rana/ Role of Innovation Comment by one scholar: “Diplomacy is about nothing other than innovation.” Examples: -- ‘Team Canada’ initiatives, using PPP models. --Indo-British Partnership: focused, self-financed counterpart programs. -- Singapore’s EDB; India’s ‘Team 9’ in Africa. Integrate eco dip into total diplomacy
Rana/ Conclusion Target-setting through consultation, pursuing unified strategy Building promotional networks, at home and abroad Sustaining ‘whole of government’ approach Better utilization of embassy networks Vision, holistic actions, sustained pursuit