Economic Diplomacy: Tips and tricks

Today the thoughts of a guest blogger: Jan-Hein Chrisstoffels

The initiator of this blog referred me to a 2008 co-authored article called "Economic diplomacy and economic security".

An interesting piece. Useful as a kick-off for thinking in a structured manner about the importance of diplomacy for economic life.

The authors - rightly, in my view - emphasize the public good nature of "secure economic production", including secure economic and trade relations across international borders (economic security). They propose economic diplomacy as the means to help protect this public good.

Halfway through the article (pages 8 and 10) the authors try to think about some implications for the existing order (OECD world) faced by the rise of China and other developing economic powers.

As they point out: "It is relevant that the combined share of the US and EU (trade), the auctors intellectualis of the rules for the WTO, will reduce to about one third of world trade by 2025. Clearly this can not remain without consequences."

Later on in the text they state: "The implications of these trends for economic diplomacy are not yet fully clear, but no doubt the decision making processes will become more complex since the number of players increases, as does heterogeneity. (...) The emergence of new economies with very different institutions and cultural background will change norms and values and this will have an impact on international trade."

The authors thus identify clear trends of change. The outcome of the trends is of course by definition uncertain. But we can be certain that developing economies will integrate into existing systems, but while they do so they will change the system and its norms, institutions and what-not with it.

Will OECD governments be succeful in adapting to these changes of instutions for which they initially wrote the rule-books? How should they prepare for these shifts in relative global economic power, and the expected changes in the context and frameworks for economic diplomacy?

It seems that a long list of ideas could be proposed. Let me throw down three initial suggestions:

1. linguistics. Diplomats and other officials rely on communication. Understanding each other`s language is the beginning and end. Don`t rely (overly) on interpreters as this will severely impede relation building.

2. norms and cultural background. Knowledge and understanding of the cultural background of developing economies is crucial to anticipate how existing institutions and norms may start to change in coming years. Anticipation means a chance to get ahead of the pack.

3. economic motivation of the developing economies. Understanding the economic history, current economic hazards (not just strengths), current aims, designs, desires and concerns of developing economies (its people and governments) will make for much more succesfull economic diplomacy. Failure to do so on the other hand may give rise to misunderstandings.

Final thought: for an inspired book on cross cultural (military) diplomacy and more check out Robert D. Kaplan`s "Imperial Grunts" (Random House, 2005)