The use of case studies in economic diplomacy research

Abstract

For long, the role of the state and the importance of foreign trade for the wealth of nations were clear building blocks of political economy. indeed, the trade function of the government was so clear to everyone that no separate terminology was needed in discussions about the state's involvement in export, import and foreign investment. neoclassical trade economics, however, opposed government intervention in international trade and investment and sought to reduce explicit and implicit subsidies, the latter including what we today label as 'economic diplomacy'. neoclassical economics was especially influenced by david Ricardo's Principles of Political Economy and Taxation (1817 [1962], para. 7.1) in which Ricardo develops the theory of comparative advantage as an explanation for the 'natural trade' that leads portugal to export wine and england to export cloth. Ricardo frames his theory of international exchange as if government was not involved in international transactions. The fact of the matter, however, is that the trade flows between britain and portugal were the result of economic diplomacy and arranged in the context of the methuen Treaty, a military and commercial treaty between portugal and england signed in 1703 as part of the War of the spanish succession (Felipe and Vernengo 2002; duguid 2007). Ricardo's influential reframing of the british-portuguese trade as market-driven at least partially explains why the role of the state in international trade and investment has been ignored for a long time in economics.This introductory chapter deals with the issues of how and why the perception of 'economic diplomacy' has changed over the past decade resulting in the emerging of a new and by now well-recognized subfield at the interface of economics (including business economics, public finance and international economics) and international political science. The chapters in this handbook provide the colors that help us to paint this picture. as with any new research field -especially when it is multidisciplinary in character -definitions of concepts regarding economic diplomacy have been initially fuzzy and occasionally have made it more difficult to agree on the exact delineation of phenomena to be studied and to decide on what is better left to other scientific disciplines. in the case of economic diplomacy research, this manner of epistemological hysteresis is due to the fact that practitioners have used the terminologies of 'commercial diplomacy' and 'economic diplomacy', unfortunately, both as synonyms and as terminologies to make a distinction between different subfields. if this distinction is made in the literature then commercial diplomacy typically refers to bilateral diplomatic activities that support private sector profit-making activities (in particular trade and investment promotion), 1 while economic diplomacy in essence is broader and next to trade and investment promotion activities involves activities of diplomats in international economic institutions such as the World Trade organization,...

Bilateral economic diplomacy between South Korea and Iraq

“…While international trade started thousands of years ago, the use of the concept of economic diplomacy is relatively new (Cavalcanti Muniz, 2018, p. 69). The concept appeared in academic papers in the mid‐1950s and was used rarely in the 1960s and the 1970s.…”