Economics and Modern Diplomacy: Simple Correlation or Well-Defined Causation? Essay Sample


The following paper will detail how economics and economic imperatives have shaped diplomacy. Through the process of globalization and advancements in travel capacity, technology and communications, primarily following the WWII era, nations have been able to secure economic prerogatives and meet goals via international cooperation. Multinational organizations help to drive financial progress.

            Globalization is a process that began occurring more heavily after WWII, when international cooperation was at the forefront of human development. Momoh, Mansbach, and others assert that globalization produces worldwide interdependence by uniting people across borders and facilitating movement of goods, people, and ideas at a rapid pace. Globalization is predicated upon several key factors that include global communication capacities, increased ordinary participation in international politics, a market, consumerist culture and the English language as a tool for worldwide communication. In addition to this, it required broad-scale demand for democratic organizations and standards.[1]

            Globalization, according to Shangquan, refers to the interdependence of world economies as a result of capital flows and trade across borders. Global economic development is irreversible at the turn of the millennium due to the expansion and integration of market limits. Marketization and increasing information significance are driving economic globalization. In other words, the rapid rate of globalization and integration of international/national economies—pronounced more recently—is based on technological and scientific development, use and proliferation. Division of labor occurs on a cross-border basis. [2]

            Both globalization and diplomacy have been around for near centuries. According to Diplo Foundation, exchanging goods demonstrates the presence of understanding about bargaining values and fosters activity skills, as well as civil relations. Ancient Greece was one of the first known sites of diplomacy, as neighboring tribes exchanged goods and services. Diplomatic institutions came out of this context. The Delian League, one of the first of such institutions, arrived as early as 7th century BCE. Most early forms of diplomacy—much like they are now—were spurred on by economic incentives and demands.[3]

            The definition of modern diplomacy entails but is not limited to global cooperation. Saliu notes there is a global ‘theatre,’ typically defined as a village of interconnected players, each with their own state needs and demands. Actors transmit messages through multiple media and convey information even to those whom they have little direct stakeholder engagements with, to solidify diplomatic relationships. Such communication occurs even when there is war. In addition to addressing the needs of their citizens, nation state heads often address international issues as well, and these statements have an impact both domestically and internationally. Usually, issues emerge when there are players who are more populist.[4] Diplomacy is a communication feature that emerges both through face-to-face, in -person and digital channels.

            Public diplomacy requires several key ingredients. Players manage information, sometimes even on an hourly basis, to convey data to audiences. They attempt to establish relationships that tend to be long-term and agree upon shared values. Scholarships, student exchanges and the sharing of culture are among three of them.[5] However, when these actors interact, they also establish economic rules and parameters that—at least—intend to confer benefits on all participation nations and their citizens.

            Thus, there is a major way in which contemporary global economic institutions have shaped or even determined diplomacy. According to Chohan, who wrote a paper on ED, Economic Diplomacy, ED was practiced among all nations and written extensively about by scholars. The following is a pertinent quote offered by the author: “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.”[6] From the perspective of international relations, ED underpins economic development. Economic decision-making also reveals how governments respond to pressures for greater democratic accountability and how they attempt to make their policies more efficient. [7]

            In some sense, ED maintains a stronghold over economic matters, simply because actors are required to work on mutual goals. The global landscape, according to Odell, defines policies that pertain to services, goods, money, investments, information, and their regulation. ED is the process of “international economic decision-making.”[8]

Sanctions emerge as a key feature of ED[9] and can be a strategy for ensuring cooperation between actors. According to Masters, sanctions are the primary way governments now respond to challenges in foreign policy. These can include freezing assets, embargoes on arms, trade restrictions and bans on travel. Non-state and state actors threatening violation of international beahvioral norms usually receive sanctions, which multinational bodies and governments impose.[10] An example of a sanction is the US embargo of CUBA, which blocked transactions between groups, individuals and businesses. Sanctions have largely facilitated both diplomacy and economic development, globally, although they continue to be tenuous and problematic in some cases. The European Union and United Nations are key players in distributing them.

Economic needs shape ED because of the different resources and skills that nation states and their citizens possess. After WWII, the individual GDPs of various countries began to grow exponentially. Between 1960 and 2019, global trade increased from 25% to now being at 60%. During the post-WWI era, global trade was growing more consistently than international GDP. The share of foreign direct investment (FDI) in global GDP has grown from 6% to 42% over the past four decades.[11] Communication, transport and advances in technology have greatly reduced geographic proximity barriers separating economies. In addition to this, multilateral and domestic policies have lowered barriers to exchange. Some of these include quotas, regulations on immigration, capital control and tariffs.[12]

Organizations like the WTO are, by nature, diplomatic because they center on cooperation and meeting global economic goals, as are multinational or transnational corporations, which drive development around the world. GVCs or global value chains create opportunities to disaggregate production into stages, which allows for multinationals to organize offerings strategically. They can thus produce more efficiently. From the 1990s onward, FTAs (Free Trade Agreements) have spurred on the emergence of WTO, World Trade Organization, which are responsible for regulating and fostering GVCs.[13]

Overall, there is a significant manner in which economic imperatives, goals, and cooperation have contributed significantly to the development of diplomacy, as well as to the diplomatic arrangements that have been made between countries. In spite of the fact that populism and nationalism pose a potential risk to the established global order, there is still a significant degree to which countries rely on one another for the provision of goods, services, and labour. It was believed that fostering development through international cooperation and diplomacy was one way to do so during a period in which technologies were advancing and becoming more advanced.

Diplomacy thus relies on a principle set of interlinked factors: the participation and engagement of stakeholders (usually nation state heads, policy makers, analysts, etc.), the ways in which nations rely on each other for economic development and—perhaps most importantly—a welcoming and friendly attitude toward different actors. Little do we talk about, in economic literature, the role that enhanced intercultural communication and openness have also contributed to diplomacy. Through a shared sense of meaning, the world has become a global village.

Works Cited

Chohan, Usman W. “Economic Diplomacy: A Review.” CASS Working Papers on Economics & National Affairs, 2021. SSRN, papers.ssrn.com/sol3/papers.cfm?abstract_id=3762042, 10.2139/ssrn.3762042. Accessed 7 Oct. 2022.

Diplo Foundation. “Economic Diplomacy – Diplo.” Diplomacy Foundation, 2021, www.diplomacy.edu/topics/economic-diplomacy/. Accessed 7 Oct. 2022.

Masters, Jonathan. “What Are Economic Sanctions?” Council on Foreign Relations, 12 Aug. 2019, www.cfr.org/backgrounder/what-are-economic-sanctions. Accessed 7 Oct. 2022.

Momoh, Zekeri. “INFLUENCE OF GLOBALISATION AND MULTINATIONAL CORPORATION ON GREEN ECONOMY IN AFRICA.” Quaestus.20 (2022): 86-101. ProQuest. Web. 7 Oct. 2022.

Saliu, Hasan, PhD. “RETHINKING MEDIA DIPLOMACY AND PUBLIC DIPLOMACY TOWARDS A NEW CONCEPT: DIGITAL MEDIA DIPLOMACY.” On – line Journal Modelling the New Europe.39 (2022): 4-24. ProQuest. Web. 7 Oct. 2022.

Shangquan, Gao. “Economic Globalization: Trends, Risks and Risk Prevention.” CDP Background Papers. United Nations, www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf. Accessed 7 Oct. 2022.

WITA. “Economic Globalization.” WITA, 2022, www.wita.org/ustrade/basics-of-trade/economic-globalization/. Accessed 7 Oct. 2022.


[1] Momoh, Zekeri. “INFLUENCE OF GLOBALISATION AND MULTINATIONAL CORPORATION ON GREEN ECONOMY IN AFRICA.” Quaestus.20 (2022): 86-101. ProQuest. Web. 7 Oct. 2022.

[2] Shangquan, Gao. “Economic Globalization: Trends, Risks and Risk Prevention.” CDP Background Papers. United Nations, www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf. Accessed 7 Oct. 2022.

[3] Diplo Foundation. “Economic Diplomacy – Diplo.” Diplomacy Foundation, 2021, www.diplomacy.edu/topics/economic-diplomacy/. Accessed 7 Oct. 2022.

[4] Saliu, Hasan, PhD. “RETHINKING MEDIA DIPLOMACY AND PUBLIC DIPLOMACY TOWARDS A NEW CONCEPT: DIGITAL MEDIA DIPLOMACY.” On – line Journal Modelling the New Europe.39 (2022): 4-24. ProQuest. Web. 7 Oct. 2022.

[5] Saliu, Hasan, PhD. “RETHINKING MEDIA DIPLOMACY AND PUBLIC DIPLOMACY TOWARDS A NEW CONCEPT: DIGITAL MEDIA DIPLOMACY.” On – line Journal Modelling the New Europe.39 (2022): 4-24. ProQuest. Web. 7 Oct. 2022.

[6] Chohan, Usman W. “Economic Diplomacy: A Review.” CASS Working Papers on Economics & National Affairs, 2021. SSRN, papers.ssrn.com/sol3/papers.cfm?abstract_id=3762042, 10.2139/ssrn.3762042. Accessed 7 Oct. 2022.

[7] Chohan, Usman W. “Economic Diplomacy: A Review.” CASS Working Papers on Economics & National Affairs, 2021. SSRN, papers.ssrn.com/sol3/papers.cfm?abstract_id=3762042, 10.2139/ssrn.3762042. Accessed 7 Oct. 2022.

[8] Chohan, Usman W. “Economic Diplomacy: A Review.” CASS Working Papers on Economics & National Affairs, 2021. SSRN, papers.ssrn.com/sol3/papers.cfm?abstract_id=3762042, 10.2139/ssrn.3762042. Accessed 7 Oct. 2022.

[9] Chohan, Usman W. “Economic Diplomacy: A Review.” CASS Working Papers on Economics & National Affairs, 2021. SSRN, papers.ssrn.com/sol3/papers.cfm?abstract_id=3762042, 10.2139/ssrn.3762042. Accessed 7 Oct. 2022.

[10] Masters, Jonathan. “What Are Economic Sanctions?” Council on Foreign Relations, 12 Aug. 2019, www.cfr.org/backgrounder/what-are-economic-sanctions. Accessed 7 Oct. 2022.

[11] WITA. “Economic Globalization.” WITA, 2022, www.wita.org/ustrade/basics-of-trade/economic-globalization/. Accessed 7 Oct. 2022.

[12] WITA. “Economic Globalization.” WITA, 2022, www.wita.org/ustrade/basics-of-trade/economic-globalization/. Accessed 7 Oct. 2022.

[13] WITA. “Economic Globalization.” WITA, 2022, www.wita.org/ustrade/basics-of-trade/economic-globalization/. Accessed 7 Oct. 2022.