The chore of economic diplomacy of a developing economy

Economic diplomacy is traditionally defined as the decision-making, policy-making and advocating of the sending state's business interests. Economic diplomacy requires the application of technical expertise which analyse the effects of a country's economic situation on its political climate and on economic interests.
Economic diplomacy is the art of serving economic security and strategic interests of the country by the use of economic instrument in conduct of state-to-state relations
Economic diplomacy is designed to influence policy and regulatory decisions of foreign governments, as well as those of international organisations. It goes beyond trade and investment to the resolution of multiple causes of international conflicts.
The agenda of economic diplomacy is comprehensive and includes amongst others issues pertaining to foreign trade and import-export relations, promoting of national economic interests in other countries, informing and updating potential foreign investors on investment opportunities, negotiating economic and trade agreements on economic and trade co-operation, as well as co-operating with a view to eliminating problematic divergences and harmonising standards in various sectors (economic, social, environmental, educational etc.).
Economic diplomacy is functional at three levels:  bilateral, regional and multilateral.
Bilateral economic diplomacy plays a major role in economic relations. It includes bilateral agreements on trade, investment, employment, taxation, as well as a wide range of formal and informal economic issues between two countries. Bilateral Free Trade Agreements have been the order of the day and are being implemented by many countries around the world.
Regional cooperation is of growing importance in economic diplomacy. National interests and economic liberalisation are well-served particularly within the context of a particular region. The removal of barriers and opening of markets become easier within a regional framework.
Multilateral economic diplomacy takes place within the framework of World Trade Organization (WTO), as well as numerous international economic and financial organisations such as the World Bank (WB), the International Monetary Fund (IMF), various UN agencies etc. With the establishment of WTO, there has been a policy shift in global trading system towards the promotion of economic activities. Sustaining competitiveness, however, continues to represent an important challenge for instruments and mechanisms established by bilateral and multilateral trade agreements.
Economic diplomacy requires application of technical expertise that analyse 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, the socio political setting, issues of mutual interest even citizen to citizen relationship.
As all government agencies that have economic mandates operate internationally and are players in economic diplomacy 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 initiated or facilitated by diplomats.
Emerging economies have learned that they are not flowers and businesses are not like bees; in other words, a nation that wants to attract business must be proactive rather than passive. They must seek out opportunities and learn to bring them home. Tax and other concessions will likely be necessary and in the short term costly. However, creative support of new business opportunities can generate major chances for success. This sort of activity is also a part of economic diplomacy.
Economic diplomacy not only promotes the state's prosperity but also, as occasion demands and opportunity permits, manipulates its foreign commercial and financial relations in support of its foreign policy. Accordingly, economic diplomacy is a major theme of the external relations of virtually all countries. At home, economic ministries, trade and investment promotion bodies, chambers of commerce, and of course foreign ministries, are all participants in economic work. Current trends include increasing collaboration between state and non-official agencies, and increased importance given to WTO issues, the negotiation of free trade and preferential trade agreements, and accords covering investments, double taxation avoidance, financial services and the like. Abroad, embassies, consulates, and trade offices handle economic diplomacy. The main focus is on promotion, to attract foreign business, investments, technology and tourists. Economic diplomacy connects closely with political, public and other segments of diplomatic work.
Economic diplomacy is concerned with setting the 'rules of the game' for the conduct of economic policy. Effective economic diplomacy requires understanding both the domestic political economy environment and the external negotiating environment, and the constraints of each. The sort of economic diplomacy that utilises a nation's already-deployed corps of diplomats to promote the nation and seek business opportunities is not traditional, but its effectiveness is apparent. Emerging nations seeking to conserve scarce personnel and financial resources immediately benefit from multitasking. To be sure most diplomats have little business experience but most can be trained to be effective economic diplomats; very often this training is best conducted by private contractors who have the required expertise to be effective.
Three elements here are important. They are:
1. Commercial diplomacy : 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). The Commercial wing of an embassy should emerge as a salesman of the commodities produces by the home country at the same time it should act as buyer of the commodities from the host country required in the home country. 
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. Economic diplomats are to study research and advocate for home country policies to the host country as well as explain the best policies in the host countries to the home front.
3. International organisations: Ways to consolidate the right political climate and international political economic environment to facilitate and institute these objectives. As a representative to the international organisations the economic diplomats should raise voice in favour of framing policies for  their own state and the economy. Should keep the home country appraised the developments in the international arena and suggest to mould and reform  the trade investment and economic policies at home.
Economic Diplomacy by major economies: the setting
Japan: Japan set out to "gather wisdom from all over the world" and embarked on an ambitious program of military, social, political, and economic reforms that transformed it within a generation into a modern nation-state and major world power, began  with the Meiji Restoration of 1868, which established a new, centralised regime. The Meiji oligarchy was aware of Western progress, and "learning missions" were sent abroad to absorb as much of it as possible. In 1871-73, a high-level official mission, the Iwakura Mission, including about half the cabinet ministers, was sent to the US and Europe for nearly two years. The total mission members were initially 107, including students dispatched abroad. Its purposes were to (i) conduct preliminary negotiations for revising the unequal treaties; and (ii) study Western technology and systems. They failed in the first objective because the West would not treat Japan equally as long as its institutions were "backward." But the officials succeeded in gaining insights in their second objective. The mission was warmly welcomed wherever they went. Upon returning, mission members called for domestic reforms that would help Japan catch up with the West. As per their recommendation Japan opened their port to the foreigners. The opening of Japanese ports led to significant social and economic changes:
-- Foreigners brought new ideas, technology, industry and systems, and the Japanese began to absorb them very rapidly. But they were also afraid of Europeans' superior military power.
-- Silk and tea suddenly found huge overseas markets. The rising output and soaring prices of these commodities enriched farmers who produced them.
-- Farmers began to buy imported clothes made in England (previously, they used to wear homemade or secondhand clothes only).
-- A new merchant class ("Yokohama merchants") emerged to link domestic producers and markets with foreign merchants (who could not travel outside the foreign settlement).
-- Inflation surged, impoverishing samurais and urban population. The entire price structure was transformed after the port opening. Old industries and traditional merchants declined and new ones emerged.
Among the members of the Iwakura Mission, Toshimichi Okubo was particularly impressed with Western technology. Returning to Japan, Okubo vigorously promoted industrialisation as the minister of finance (later, as the minister of interior). His policies included hiring foreign advisors, hosting domestic industrial exhibition, and building roads, railroads, agricultural research centers, and so on. Many state-owned model factories were established in silk spinning, shipbuilding and mining (most mines were rehabilitated mines from the Edo period). New systems such as metric weights and measures, Western calendar, new monies, banking, joint stock companies and so forth were introduced. Most SOEs were commercially unsuccessful, but they had strong demonstration effects. They also trained many Japanese engineers who later worked in or established other factories. Subsequently, these SOEs were privatised (except military ones). After privatisation, some of the loss-making enterprises were restored to profitability through restructuring and new investment. The government sometimes confused businesses with inconsistent policies. But more often, it supported them in order to establish domestic industries (and drive out foreign companies). Big business groups started to form. Politically well-connected businessmen are called seisho and their groups are called zaibatsu.. Some of them (Sumitomo and Mitsui) date back to the Edo period, but most of them newly emerged during the Meiji period (Mitsubishi, Furukawa, Yasuda, Asano, etc)
Facades Bangladesh-Japan economic diplomacy: Soon after the opening of the Embassy in 1972, the Japanese government sent Takashi Hayakawa to Bangladesh to assess the needs of the new nation, followed by a team of Japanese experts. Japan came forward with aid, trade and investment in Bangladesh. Economic diplomacy took the lead in establishing close ties with Japan.
The amount of two-way trade varies between $500-700 million per year and the balance is heavily inclined towards Japan. Bangladesh imports from Japan are mostly raw materials for industrial use, equipment under development projects and manufactured items. Major exports from Bangladesh include tea, shrimps, leather, jute products, footwear, and ready-made garments.
Japanese investment in Bangladesh ranks fourth among other foreign investors. So far, about 146 projects with 100 percent investment or joint ventures between Bangladeshi and Japanese companies have been registered with the BOI, with a figure amounting $1,193,769 million.
The Bay of Bengal, a strategic location for Bangladesh, as a bridge between South and Southeast Asia, are still actively  considered to bring in more Japanese investors. Japan Bank for International Co-operation (JBIC), a conglomerate of Japan's Export-Import Bank and Japan's Official Aid Agency, has been a key player in channelling development assistance to Bangladesh. Japan's official development assistance has three components -- grant aid, technical co-operation and loans.
China: Economic diplomacy is a central aspect of Chinese foreign policy. During its remarkable economic rise, China has had  used economic diplomacy primarily through trade, and the use of carrots as a means to accumulate or attract soft power. This was a part of the broader strategy formulated by think tanks in the PRC during the 1990s titled the new security concept . It is referred to in the West as the period of " China's peaceful rise ".
Recently, China has changed its strategic doctrine and begun to use economic diplomacy as a coercive tool. After 10 years or so of a policy based primarily on economic carrots. China blocked shipments of rare earth minerals to Japan, China sent a gunboat to Philippines to enforce trade restricts. China's willingness to use bring in warships during trade disputes is reminiscent to an earlier era of American gunboat diplomacy. In response to the 2010 Nobel Peace Prize went  to Chinese dissident Liu Xiaobo from the Norwegian Nobel Committee, China froze free trade agreement negotiations with Norway and imposed new veterinary inspections on imports of Norwegian salmon. This caused the volume of salmon imports from Norway shrunk 60 percent in 2011
United States: The United States has a long history of economic diplomacy dating back to the dollar diplomacy of William Howard Taft. The US was also central to  the most important economic diplomacy event, the Bretton Woods Conference where the IMF and WB were created. The United States was involved in one of the more notable acts of economic diplomacy in history with the Marshall Plan.
US policy makers now see economic development  and democratic development as inextricably linked. In their view that their model is not only the best for them ; they  think it embodies universal principles, human aspirations, and proven results that make it the best model for any country or people.
India: India traditionally has engaged in economic diplomacy primarily through the use of trade and aid. For example, in order to build a stronger, more stable relationship with Bangladesh, India granted it an $800 million soft loan, and provided $200 million in aid. India set up a development wing in its government in January 2012. The Development Partners Administration (DPA), is a primary way India uses economic diplomacy, in this case development aid, as a way to engage diplomatically. The DPA is building 50,000 housing units in Sri Lanka, a large transmission line in Afghanistan, and extends Lines of Credit projects globally, particularly in Africa. Economic diplomacy and the DPA are very important to Indian foreign policy objectives of transforming India into a global player.
Australia: Economic diplomacy uses their  international diplomatic assets to advance Australia's prosperity and global prosperity. Australia's economic diplomacy agenda is based on four key pillars:
1. promoting trade
2. encouraging growth
3. attracting investment
4. supporting Australian business.
Economic diplomacy supports prosperity. "If the goal of traditional diplomacy is peace, then the goal of economic diplomacy is prosperity"
Australia's prosperity is more connected than ever to developments in the global economy. Its trade with the world is equivalent to 42% of their  GDP - a number that hasn't dropped below 25% since 1900. The stock of foreign investment in Australia is at record highs of A$2.8 trillion, while Australia's investments around the world total A$2.0 trillion (2014).
Australia has the world's 5th highest GDP per capita and has the 12th largest economy. But to sustain this performance requires strong international engagement.
Imperatives for economic diplomacy: Faced with globalisation and competition for  foreign direct investment as well as with the growing influence of international economic standard setting organisations (WTO, ITU, ILO etc.), countries are  compelled  to expect that diplomats specialised in Economic Diplomacy and Commercial Diplomacy more effectively serve their national interests in the economic and business spheres and the  Ministries of Foreign Affairs need to expand their institutional capabilities in dealing with non-state actors and other government ministries and learn to manage the multiple boundaries of today's complex economic and political realities. Proliferation of "Foreign Affairs Departments" at other important and economic related  ministries responsible for specialised policies are increasingly engaged in policy dialogues with counterparts in other countries. With growing use of international conferencing, these ministries inadvertently may challenge the traditional lead role of the MOFA in matters regarding state-to-state exchanges or participation at international standard setting fora. These specialised Ministries should not erode the MOFA responsibility in handling foreign economic affairs. In close coordination with MOFA ,Ministry of Finance  may  lead at the International Monetary Fund (IMF) or World Bank, the Ministry of Telecommunication at ITU, Ministry of Labour at the International Labour Organisation (ILO) and Ministry of Commerce  at WTO.
Faced with this proliferation of diplomatic activities by other ministries, unfortunately many MOFAs either try to block entry of other ministries into the international arena or gradually accept a secondary role at international meetings. MOFAs instead of doing so they should have been successful in transforming their role from being solely responsible for foreign economic policy to becoming the overarching coordinator of inter-ministerial foreign economic policy formulation. Such a more consultative role allows specialised ministries to participate in the formulation of negotiation positions while at the same time leaving the MOFA diplomats formally in charge of national delegations at international economic meetings. This trend of decentralisation as well as the growth of the sense "Unity in Diversity" should also led to greater involvement of concerned  entities in matters traditionally monopolised by the MOFAs. Instead of state-to-state negotiations, newly empowered relevant ministries  initiate their own international ties and maintain separate mechanisms to satisfy their locally specific interests, be it economic, environmental or social. Provincial governments like the German Länder opened representative offices in Brussels in order to influence decision making at the EU Commission and EU related institutions. The same process can be observed for non-EU countries like Switzerland whose larger cantons (provinces) also opened representative offices in Brussels even though Switzerland is not a EU member state.
Bangladesh may make a concerted effort to engage in economic diplomacy with the both developed and developing economies to acquire and disseminate knowledge applied to social and economic development. Bangladesh may practice the concept of not simply receiving knowledge from developed countries, but also sharing its own experiences with others in effective partnerships towards development. South-South cooperation contributes to consolidating Bangladesh's  relations with partner countries as it enhances general interchange; generates, disseminates and applies technical knowledge; builds human resource capacity; and, mainly, strengthens institutions in all nations involved. As a leading country of least developed economies Bangladesh's  ultimate goal of technical cooperation -- exchanging experiences and knowledge -- materialises reciprocal solidarity among peoples and should not only benefit recipient countries, but Bangladesh  as well.

Dr Muhammad Abdul Mazid, retired Secretary to the Government and former Chairman of NBR. Dr Mazid served as Trade Diplomat (Commercial Counsellor) at  the Bangladesh Embassy in Tokyo, Japan from 1994 through 2000.
He can be reached at: [email protected]