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Financial diplomacy for third world international locations within the age of globalization

Political

Financial diplomacy for third world international locations within the age of globalization

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Business diplomacy has been a very popular practice for 50 years. It has become the most important instrument for states to pursue their goals, build relationships with others and expand their sphere of influence.

Especially after the Second World War, the world economic order changed significantly with the idea of ​​globalization and the free market economy. The economy becomes the main engine by which states increase their political influence. In the post-second world order, the US-initiated Marshall Plan to rebuild the Western European economies pursued political goals. The establishment of the European Steel and Coal Community was also clearly of an economic and political nature. The development of the General Agreement on Tariffs and Trade (GATT), which became the World Trade Organization (WTO) in 1995, and the establishment of the World Bank (WB) and the establishment of the International Monetary Fund (IMF) to control the trade and financial system became instruments of powerful countries in pursuing their foreign policy goals.

Every state has its foreign policy goals. And diplomacy is the instrument with which states pursue their goals and implement these policies. In the age of globalization and modern warfare, the use of military means is not preferred, which can contribute to the achievement of foreign policy goals, but are associated with higher costs. As a result, we can see that the use of economic diplomacy is growing enormously in popularity. Robert Gilpin defines economic diplomacy as the use of political means as a lever in international negotiations with the aim of increasing national economic prosperity, and the use of economic levers to increase the political stability of the nation. Baldwin describes economic statecraft as the strategic use of positive and negative economic sanctions such as trade embargoes and aid programs by states and other actors.

Need for economic diplomacy from a third world perspective

The economy is the driving force of the 21st century. Powerful countries are increasing their economic ability to survive in this current world order. Countries are now focusing on a strong economic base rather than a strong military to achieve their goals at relatively low cost. We often see that powerful states like the US and China use their economies in the form of sanctions, embargoes, tax increases against each other and less powerful states to meet their demands. We can see the simultaneous trade war between the US and China as an example of how the economy can be a great force in international relations. In this context, where economies are becoming a major power in international politics, so-called Third World countries with their huge populations often have lower per capita incomes and use their economies at the negotiating table to their advantage, far behind the developed countries .

Political dimension

Third world countries are often dominated by developed countries due to their weak position in the world power structure. Their demands are often ignored and ignored by the world community. Like the urgency of Third World countries to stop further environmental degradation by industrialized countries because of their excessive CO2 emissions, industrialization has often been ignored at many environmental conferences. If they deal more economically with powerful countries, a kind of dependency relationship arises, which in return gives them political security. Economic diplomacy is also necessary to ensure the future energy security of third world countries. Because sometimes they have few natural sources of energy or lack the knowledge and technology to get the most out of them. Economic diplomacy also helps facilitate regional cooperation through trade, which jointly strengthens political standing. We can see the European Union as a great example of regionalism. Even when third world countries conduct economic diplomacy with less powerful countries, this works as a balance of power with powerful nations and opens up a new platform for relationships.

Economic dimension

There is always a huge imbalance between the amount of imports and exports to third world countries. These countries often have huge workforces with no minimal skills or knowledge, a limited market, low investment rates, and a lack of infrastructure that hamper economic growth. As these third world countries are doing economic diplomacy with other countries, this will provide some push factors that will help them set out for better economic development. Economic diplomacy will be a great opportunity to make best use of the huge workforce in two ways. One possibility could be the emigration of the workforce to another country. And on the other hand, the labor cost is very low because there is an abundance of labor. So that it attracts more foreign direct investment (FDI). As per capita income and GDP increase due to increased foreign investment, this will lead to greater efficiency in the workforce and encourage people to invest more domestically and abroad. A massive transfer of modern technology and infrastructure development will take place through increased foreign involvement. Third world countries also have very few treaties such as the Free Trade Agreement (FTA) signed with other countries that maximize a country’s exports. Many new contracts can be signed with others through economic diplomacy.

Social dimension

When a country is destroyed both economically and politically, its social welfare cannot be guaranteed. We often see the inability of third world countries to meet basic human needs for their citizens due to their poor economic situation. As a result, various groups in third world countries often get into conflicts over resources, living space and other things, so that society remains unstable.

It is therefore necessary that they become more involved in economic diplomacy. It works like a kind of positive cycle of wellbeing. When a country engages in economic diplomacy, it strengthens its political power and helps maximize economic development. And when the economic and political well-being of a country is secured, social assistance comes automatically. State commitment to its citizens will be fulfilled and society will remain stable. These create a conducive prerequisite for further development.

The author is a student of International Relations, University of Dhaka

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