chapter  1
14 Pages

What is economic diplomacy?

ByNicholas Bayne, Stephen Woolcock

We call this book The New Economic Diplomacy to emphasize how much this activity has changed in the 25 years since the end of the Cold War. For half a century after World War II, economic diplomacy was dominated by permanent officials from the governments of a limited number of countries. 1 It was shaped by the constraints of East-West rivalry. Now, with the advance of globalization in the 21st century, there are far more non-government players, while ministers and heads of government are active alongside their officials. Originally limited to measures taken at the border, economic diplomacy increasingly operates ‘within the frontier’ and inf luences domestic policy. Above all, there has been a steady trend towards far more integrated markets in a single economic system covering the entire world, with many more countries active in it. New emerging powers, with China in the lead, have made great advances, while mature economies of North America, Europe and Japan have lost ground, especially after suffering financial collapse and economic recession. All these trends will shape this book, along with new ones. Since 2011, emerging powers have met difficulties and the G20 summit, which integrated them, has lost momentum. The European Union faces recurrent crises, the latest being the United Kingdom’s decision to leave.