Economic diplomacy

Economic diplomacy is a form of diplomacy. Economic diplomacy is the use of the full spectrum economic tools of the state to achieve its national interest. Economic diplomacy includes all the economic activities, including but not limited to export, import, investment, lending, aid, free trade agreements etc.

Economic diplomacy is concerned with economic policy issues, e.g. work of delegations at standard setting organizations such as World Trade Organization (WTO). Economic diplomats also monitor and report on economic policies in foreign countries and give the home government advice on how to best influence them. Economic diplomacy employs economic resources, either as rewards or sanctions, in pursuit of a particular foreign policy objective. This is sometimes called "economic statecraft".

Economic diplomacy is traditionally defined as the decision-making, policy-making and advocating of the sending state-business interests. Economic diplomacy requires application of technical expertise that analyze the effects of a country's (Receiving State) economic situation on its political climate and on the sending State's economic interests. The Sending State and Receiving State, foreign business leaders as well as government decision-makers work together on some of the most cutting-edge issues in foreign policy, such as technology, the environment, and HIV/AIDS, as well as in the more traditional areas of trade and finance. Versatility, flexibility, sound judgment and strong business skills are all needed in the execution of Economic Diplomacy.

a. Scope: International and Domestic economic issues – this includes the “rules for economic relations between states” that has been pursued since the World War II. And owing to the increased globalization and the resultant interdependence among state during the 1990s obliges “economic diplomacy to go deep into domestic decision making” as well. This covers “policies relating to production, movement or exchange of goods, services, instruments (including official development assistance), money information and their regulation” (Bayne and Woolcock (eds) 2007)

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