Rana/2009

Economic Diplomacy--Basics Kishan S Rana

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1. Key Drivers

A. MFA not exclusive, even primary, contact channel - must coordinate other agencies, sub-state entities B. Non-state actors, T2 & T3 growing, have to be co opted; may be unpalatable C. Issues have multiplied, intertwined D. Networking with own + foreign companies, chambers, thinktanks, academia vital for eco dip Rana/2009 2

1. Continued

E. Heads are hyper-active, huge growth in summits, direct diplomacy, ‘illusion of familiarity’; role of MFAs has grown F.

Commodification of information, velocity of change G. Good governance, ‘value diplomacy’ pose challenges (NEPAD in Africa) Rana/2009 3

1. Continued

H. G. Impact of ICT, makes possible MFA- embassy integration, new concept I.

Wider spectrum of representation within embassy abroad, ‘CEO amb’ concept; management challenges J.

MFA and eco ministries need to work together, for best external projection Rana/2009 4

2. 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 1460-1220 BC) Does flag follow trade (as with East India Co)? Often. Flag & trade are inter-twined Today economics often determines politics (US China, but in South Asia ?) Rana/2009 5

3. 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.

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3. (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/2009 7

3. (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/2009 8

4. 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/2009 9

4. 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/2009 10

4. 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 Media have produced innovative models of their own; should be encouraged Rana/2009 11

5. Promotion Methods

• • • • • Assess real situation, objectively.

Using both wide catchment creation and pursuit of specific targets.

Using locals + “success stories”.

Outreach, integrating all diplomatic sectors, from culture to consular services + other agencies + diaspora.

Mobilize regional approach.

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6. 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/2009 13

6. Continued

• • • • • South Asia is the world’s least integrated region Analyze Sri Lanka + other 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/2009 14

7. 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/2009 15

8. 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 Rana/2009 16