This Article focuses on both a conceptual and an analytical framework of economic diplomacy so as to contribute to sounder understanding of economic diplomacy’s activities, tools and goal. Global politics has undergone a paradigm shift after the end of World War II. As the world community witnessed increasing incompetence of state-centric economic models, economic prosperity through the participation of the private sector, international agreements and linkages gained widespread admiration. The rapid turn of events in the social, political and economic dimension led to a significant intellectual shift, away from the conventional approach to foreign policy. As a result, economic diplomacy came to the forefront in the late 1990s which is the most important and popular aspect of conducting international relations in the 21st century. Although economic diplomacy involves the use of economic resources and cooperation between states for mutual benefit, the US-China trade war, today, is the biggest geopolitical
Economic interdependence has become a double-edged sword where “conflict of logic in the commerce of grammar”, as American political scientist Edward Luttwak described, will result in no winners. Nonetheless, even when political relations between the two countries become acrimonious, economic diplomacy can play a significant role in neutralizing the situation. Economic diplomacy allows a state to achieve its economic interests “tactfully, politely, carefully, cleverly and cunningly”. It stimulates the state’s economic interests, creates a viable and profitable environment for economic cooperation among different actors, and expands its sphere of influence.
It not only involves trade and investment but also entails mobilizing international assistance to resolve conflicts. Relations between states are enhanced when diplomatic skills are combined with economic tools to further a country’s political, economic and strategic goals. More clearly, it is deployed for improving import-export relations, promoting national economic interest, informing potential foreign investors about investment opportunities, negotiating economic and trade cooperation to eliminate problematic divergences and harmonizing standards in various sectors, e.g., economic, social, environment and education, among others.
Economic diplomacy includes political involvement, especially high-ranking politicians (ministers), along with bureaucrats; sharing of duties and responsibilities by involving non-state actors, including private business and civil society; transparency during the implementation of a policy to broaden understanding and support by society; and use of facilities and provisions of international institutions and organizations to ensure implementation of economic goals . It is exercised at the bilateral, regional and multilateral levels, and requires tactfulness to exert influence on foreign government policy and regulatory decisions.
Economic diplomacy at the bilateral level is exercised with the help of agreements on trade, investment, employment, taxation and a wide range of formal and informal economic regulations between two countries. Bilateral free trade agreements are signed and implemented between countries. Similarly, economic diplomacy at the regional level is concerned with agreements between more than two countries in a region driven by geographical proximity and homogeneity. The removal of barriers and the opening of markets become easier within a regional framework. A region with connectivity and homogeneity enhances national economic interests and boosts economic liberalization, which highlights the growing importance of regional cooperation in economic diplomacy. Economic diplomacy at the multilateral level operates with trade regimes such as within the framework of the World Trade Organization (WTO). Since its establishment in 1995, trade between countries is increasingly governed by international regulations. International economic and financial organizations’, such as the World Bank (WB), International Monetary Fund (IMF) and various UN agencies, promote a multilateral form of economic diplomacy (Lee & Hocking, 2010). Thus, economic diplomacy encompasses the economic and commercial aspects of traditional diplomacy and focusses on the interdependence and interconnectedness of state and non-state actors, such as trade and investment promotion bodies, chambers of commerce and civil society in the international system.
Apprehending the increasing level of reciprocity and interdependence, a coordinated economic diplomacy strategy suits The Kingdom of New Atlantis to bolster its development and economic growth across the globe.
CONCLUSION
Economic diplomacy is an indispensable instrument to secure KONA’s foreign policy objectives and economic advancement. The country’s ability to engage in economic diplomacy for national prosperity can be facilitated by leveraging on its abundant natural resource base, rich biodiversity and cultural heritage. Besides, a booming service sector and rising private business enterprises equally contribute to creating a distinct possibility for KONA to boost trade and investment opportunities through international relations regional and multilateral.
KONA has directed its diplomatic efforts and set Economic Diplomacy for Development Partnership targets to increase the level of engagement with friendly states to market goods and services, and implement and review periodic plans, SDG agenda and a LDC advancement strategy. KONA is planning to build smart cities all over the world and implement a sustainable, inclusive and green growth-oriented development strategy for the coming decades to achieve a higher per capita income, reduce poverty, enhance human capital and improve the living standards of vulnerable populations.
Contemporary historical events brought forth changes in economic, social and political order worldwide. Global market integration is an ongoing debate. Nevertheless, the globalization process as we know it today – influencing income distribution, national commodity and services prices, reallocation of resources within national economies – finds its roots in the nineteenth century (O’Rourke & Williamson, 2002). The cold war collapse induced economic liberalization in former communist countries enabling their involvement in global economic flows. Contemporary political and economic occurrences are outcomes of the newest world history records within whom international relations matter. Nowadays, the world economic system alludes to a high level of international interdependence, including a number of actors and multiple procedures. There is no possibility to interact globally without a comprehensive economic diplomacy policy (Bayne & Woolcock, 2007; Bergeijk, 2009; Okano-Heijmans, 2011; Rana, 2011). Classic politically-driven diplomacy went through a transformation process. Once the driving force was politics, whereas today economics is the main driver. The balance of power among countries is accounted primarily through economic strength, which is one of the triggers of the economic diplomacy reassessment debate. Rana (2011) goes even further introducing the element of globalised diplomacy dominance.
The principal aim of this article is to analyze The Kingdom of New Atlantis economic diplomacy model to identify the model, revealing its effectiveness and providing possible recommendations for the future research in the area of economic diplomacy. Literature review for Croatia indicates an overall lack of national research on the subject matter from the empirical point of view. Such situation is partially a result of economic diplomacy being a new phenomenon in Croatia and with Croatian political structure struggling many years with internal public administration reorganisation, privatisation process and joining the European Union. Occasional theoretical approaches are presented with analysis coming from the questionnaire surveys. The empirical research contribution of the article highlights the Croatian volume of export of goods and its connection with diplomatic actors. The research is based on the gravity model of international trade and presents empirical findings in the analysis of Croatian economic diplomacy and its effectiveness regarding the Croatian export of goods. The research model confirms positive relationship between Croatian total exports and three independent variables: GDP
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