THE INCREASING USE OF ECONOMIC DIPLOMACY

Economic diplomacy is a form of diplomacy. Economic diplomacy is the use of the full spectrum economic tools of a 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 the process through which countries tackle the outside world, to maximize their national gain in all the fields of activity including trade, investment and other forms of economically beneficial exchanges, where they enjoy comparative advantage.; it has bilateral, regional and multilateral dimensions, each of which is important. This new approach involves an analysis of a nation's economy, taking into account not only its officially reported figures but also its gray, or unreported, economic factors.

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, 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. And owing to the increased globalization and the resultant interdependence among state 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.

b. Players: State and non-state actors: As all government agencies that have economic mandates operate internationally and are players in economic policy though they do not describe them as such. Further, non-state actors such as NGOs that are engaged in economic activities internationally are also players in economic diplomacy. Businesses and investors are also actors in the process of economic diplomacy, especially when contacts between them and governments are intiated or facilitated by diplomats.

In short Economic Diplomacy comprises three elements:

1. Commercial diplomacy and NGO's: The use of political influence and relationships to promote and/or influence international trade and investment, to improve on functioning of markets and/or to address market failures and to reduce costs and risks of cross border transactions(including property rights).

2. Structural policies and bilateral trade and investment agreements: The use of economic assets and relationships to increase the cost of conflict and to strengthen the mutual benefits of cooperation and politically stable relationships, i.e. to increase economic security.

3. International organizations: Ways to consolidate the right political climate and international political economic environment to facilitate and institute these objectives