as an inevitable event, the process of globalization intensifies the interdependency of states. The very emergence of rules and regulations governing the world trade or mutual commercial agreements opens doors to new opportunities in the field of global business.
as an inevitable event, the process of globalization intensifies the interdependency of states. The very emergence of rules and regulations governing the world trade or mutual commercial agreements opens doors to new opportunities in the field of global business. The new conditions makes governments involve in negotiations which lead to regional, bilateral, multilateral, and international treaties. Such negotiations require a full understanding of knowledge and skill of economic diplomacy.
Economic diplomacy is the offspring of trade diplomacy which was traditionally an exclusive field for government authorities and diplomats while the private sector and civil society were excluded. With the expansion of globalization of economy and its complexities, economic diplomacy turned into an intrinsic component of foreign policies in most countries throughout the globe. Transformation of trade diplomacy to economic diplomacy paved the way for inclusion of private sector and civil society to maintain both the competitive capabilities and national interests.
Economic diplomacy deals with the prediction of the effects of economic policies of other countries. It requires full recognition of market forces in various countries and in the dynamic economic environment of the world. Continuous involvement in economic diplomacy helps the countries realize their economic interests and, at the same time, consider those of their partners. A vital prerequisite for this goal is the existence of a rich reservoir of experts in government, private sector, and civil society. These experts view trade, investment, and other economic issues from the perspective of national development and then expose them to negotiations. They consider the threats, strengths, restrictions, and opportunities in this process.
From a limited viewpoint, economic diplomacy is defined as an operation performed by government authorities or diplomats in the context of negotiations and relations between nations. This diplomacy incorporates the art and science of execution of relations, negotiation management, public relations and so on so that there remains no evil intention. In other words, negotiations should result in a positive ending for a game. In a broader view, economic diplomacy includes the management of international relations via negotiations with government authorities or diplomats, required skills for such management, dexterity in interpersonal relations, shrewdness, as well as cooperation with private sector and civil society. In other words, economic diplomacy concerns with creation of foreign policies in the real world of economic relations between nations so that it can execute the principles and objectives as specified in the policies. This diplomacy incorporates skill and dexterity in making formal relations particularly in trade and investment wherein governments, private sectors, and civil societies interact in a constructive manner. In this new environment, national economic achievements depend on effective execution of economic relations/ partnership. Learning new skills and obtaining modern knowledge are not optimal, rather mandatory.
Economic diplomacy deals with economic politics. Economic diplomats monitor the economic policies of other countries and report to their superiors. They recommend their governments how to influence the existing policies in the best way. In this sense, economic diplomacy uses economic resources as either rewards or sanction tools so as to actualize a certain goal in foreign policies. That is why economic diplomacy is also called economic tool of states.
Economic diplomacy means decision-making, policy-making, and supporting commercial interests of the nation. It requires a technical dexterity to analyze the effects of economic situation of one country on political environment and economic interests of the other. Sending and receiving countries, leaders of foreign trade, as well as government decision-makers cooperate in dealing with highly sensitive issues regarding foreign policies. Such cooperation can be observed in areas such as technology, environment, AIDS, and traditional areas like business and finance. International economic negotiations, therefore, are of high significance as they can formulate both domestic and foreign policies in a way which satisfies regional interests and lead to sustainable benefits.
Economic diplomacy includes relations with institutions and businesses of foreign countries as well as international organizations to actualize the interests of the sender government. It seeks resolutions to business disputes and negotiations with business partners to liberalize world trade. It facilitates negotiations concerning business agreements and treaties and coordinates financial aids for problematic areas. Moreover, economic diplomacy enables all economic partners to enhance living standards in both sender and receiver countries, harmonize their trade policies, promote open markets, and strengthen policies and interests with regard to technology, environment, science and international affairs.
Economic diplomacy deals with the relationship between might and wealth in international transactions. It not only helps nations to prosper, but also manipulates financial and economic relations based on circumstances and opportunities and in favor of foreign policies. Such a situation occurred while imposing sanctions on Iran. With the same token, economic diplomacy is the main objective of foreign relations in almost all countries. Domestically, the ministries of economic affairs, the organizations of business development and investment, chambers of commerce, and, of course, ministers of foreign affairs are the main players. Abroad, embassies, consulates, and business offices shoulder the task of economic diplomacy. The main focus rests on promotion of relations, absorption of foreign trade, investment, technology, and tourism. Economic diplomacy maintains a direct relation with political, general, and other dimensions of diplomatic activities.
Background and applications
As an effective instrument, diplomacy can be employed for economic development. Traditionally, diplomacy is associated with a picture of a group of people wearing formal suit, ties, and neat shoes and living a luxurious life abroad. They are the mediums of maintaining good relations between nations, negotiators during debates, and facilitators of deeper and stronger ties. Using diplomats to achieve mutual benefits dates back to ancient times. Its shape and employment depended upon its goals and was different in various regions such as China, India, ancient Greece, and Europe. In the past and in an unofficial diplomacy, a group of negotiators or diplomats was sent to a particular region to fulfill a certain task. They used to talk with their counterparts about certain subjects. These days, however, using diplomatic missions or official diplomacy is a prevailing convention all over the world.
In an applicable term, economic diplomacy is defined as decision-making, policy making, and defending the business interests of the sender country. It requires the application of a technical skill which analyzes the impacts of economic conditions of a country (receiving) on political environment and economic interests of the sending country. Sender and receiver states, leaders of foreign trade, and government decision-makers cooperate in sensitive issues in foreign policies including technology, environment, AIDS, commerce, and financial affairs. Successful implementation of economic diplomacy depends on diversity, flexibility, sound judgment, and strong business skills. The domain of economic diplomacy covers both domestic and international economic issues. The former deals with production policies, trade of goods and services, as well as monetary regulations and information. The latter includes the laws of economic relations between nations, particularly after the Second World War.
Field players consist of government and non-government agents. All state firms together with economic NGOs, businessmen, and investors participate in economic diplomacy especially when their mutual relations are triggered and facilitated by diplomats. In this way, nations involve in a process through which they can maximize their national interests in all areas of activity including trade, investment, and other economic transactions that create comparable advantages. In addition, economic diplomacy investigates both official figures and ambiguous economic factors. While considering all factors, it may prove that some apparently poor countries are much richer than they look and can be potential investment destinations.
Iran and economic diplomacy
As mentioned earlier, economic diplomacy plays a key role in the process of economic development. It includes a series of measures which enhance government policies in the fields of production, transfer of goods, services, labor force, as well as entrance and exit of investments. Economic diplomacy creates a positive image of the country in the world and plays a vital role in the process of formulation, development, and protection of national interests.
If economic diplomacy is to be successful, it should have a vivid perspective and orientation, be organised in an efficient way, be equipped with sufficient human and financial resources, be introduced as an active component in the country, s foreign and economic policies, and create its services in compliance with the real demands of the firms and with the contribution of the private sector.
Iranian diplomacy need to posses the such features. It should provide a positive image of the country as a modern nation and a reliable partner in business transactions and a suitable place to make investment. For this purpose, it is necessary to create a network of diplomatic missions in which economic and business developments are an inseparable part of embassies. Public and private sectors should involve in close cooperation with the experts from the ministries of foreign affairs, mine and industry, and commerce. They should consider the promotion of economic interests of the country as their main priority abroad. Protection of such interests is an inseparable part of the activities conducted by the ministry of foreign affairs and enhance the position of this ministry. This vital role cannot be delegated to other bodies.
Effective economic diplomacy can be realized via training professional and specialist forces who represent their country and are active, independent and capable agents. These criteria should be considered while selecting economic diplomats. Economic knowledge and managerial skills of economic diplomats and office managers in the ministry of foreign affairs should be enhanced. Curriculum designers in the faculties of finance and management are required to cooperate with the ministry of foreign affairs.
Despite abundant natural resources, factors such as inappropriate utilization, brain drain, and, of course, international sanctions against Iran prevented the country from arriving at a suitable economic position which it really deserves. Development and maintenance of friendly relationship with other countries and acceleration of cooperation with both developing and developed nations can be a reasonable way to compensate for the past failure.
Iran needs to play a more active role in establishment of regional and international treaties. It should invite proficient people in the fields of trade and business so as to get better results in its economic diplomacy. It is high time to formulate a combination of diverse negotiators who are skillful in mutual, bilateral, and multilateral negotiations. They should also be univocal in addressing foreign partners. The promotion of Iran' standing, making trademarks, absorption of foreign investment, adoption and employment of modern technology, and efficient management of foreign aids should rest among the main priorities of the government. A positive image of the country results in attraction of direct foreign investments and this is exactly what economic diplomacy aims at. This image will also make domestic investment more dynamic and improves tourism industry. Dynamism, in turn, encourages the presence of strong global firms and turns domestic companies into international corporations. In order to demonstrate a positive image, all politicians and statesmen ought to bear responsibility for their comments. They have to keep in mind that all international media are monitoring and reflecting their words and whatever they say may damage the image of the country. Besides, politicians and economic diplomats need to demonstrate a stronger presence in international media.
The ministry of foreign affairs, embassies, and Iranian diplomats are all responsible for creation of a positive image of the country and try to erase any negative presupposition. Their capabilities may be restricted in some cases, but it is necessary for them to take a progressive attitude instead of a reactionary one. Through establishment and participation in commercial exhibitions, investment forums, and business-to-business talks, the ministry of foreign affair can help facilitate trade and business. They can identify the demands of foreign markets for Iranian products and facilitate the process of export.
A positive image of the country will also prompt expat Iranian investors, the educated, and talents who have left their country for whatever reason. It is quite obvious that diplomatic missions can play a vital role in sustainable economic development of the country. Iran needs such an effective diplomacy in order to accelerate its economic development process.