Econometrics of Diplomacy in Ethiopia’s Foreign Policy

Econometrics, at the risk of oversimplification, is the use of mathematical methods (especially statistics) to describe economic systems.

Ethiopia is one of the oldest nations, with a proud record of political and territorial independence. As an independent political entity, it has a long period of diplomatic relations and history.

Ethiopia’s diplomacy for much of its existence has served the survival of the nation, as articulated in Edmond J. Keller’s “The Politics of State Survival: Change and continuity of Ethiopian Foreign Policy”.

“The fundamental essence of Ethiopia’s foreign policy has not changed over the past century despite a change in regime,” he argues.

He went on to write that, although the imperial regime has been displaced by a military Afro-Marxist government, the main focus of the country’s foreign policy continued to be the desire to have the multi-ethnic character of the nation-state internationally accepted as legitimate and to defend its territorial integrity.

The foreign policies of the two regimes are deemed to have left Ethiopia’s survival to the international super powers (the US and former USSR). Ethiopia has forgotten, for at least a century, its real Achilles heel when it pursued an outward looking foreign policy. The country’s foreign policy has been pursued to advance the national interests through adjustment and readjustment, with the distribution of power in the international system.

The foreign policy of both Emperor Haileselassie and Colonel Mengistu over proportionately clung to the US and the former USSR, respectively, and was unconditionally readjusted as the wind in there blew.

The survival of the state has been the centrepiece of the current foreign policy, as was the case during the past regimes. Though the means differs, the end seems to be the same – the politics of state survival. As the end does not necessarily justify the means, it is indispensable to give due attention to one’s means if one would like to see an axiomatically inevitable good enough end.

No matter how good a policy is and no matter how good an intention is, it could only be turned into reality through means as good as the policy and the intention. The problem is that identifying the means is a hard task. It needs a clever analysis of the strength, weakness, opportunity and threat of institutions, groups and individuals of the political, economic and socio-cultural environment of the state.

The incumbent foreign policy is clear eyed in pinpointing the country’s vulnerability and the danger for its survival. It is obvious in asserting that Ethiopia’s vulnerability is of an internal nature, emanating from poverty and underdevelopment. The threat to Ethiopia’s survival is poverty, underdevelopment and lack of good governance and democracy. That means development defined in the wider sense of the term is the way out.

The foreign policy, as the subservient of domestic policy, should serve development. The best way to do so is economic diplomacy. But the billion-dollar questions are what do we mean by economic diplomacy in Ethiopia’s foreign policy? What are its fundamentals? Are we doing it the right way?

“Economic diplomacy is the use of government relations and government influence to stimulate international trade and investment, and covers a broad range of semi-permanent international representations (embassies, consulates and other public sector business support facilities), domestic institutions (investment and export promotion offices) and diplomatic bilateral activities,” as defined by Selwyn J.V. Moons and Peter A.G. van Bergeijk.

There have been four indispensable reasons for the emergence and sustained relevance of economic diplomacy in international engagement. They are factors associated to culture, balance of power, political uncertainty and information asymmetry.

Economic diplomacy continues to be at the heart of Ethiopia’s foreign policy strategy. This is because economic diplomacy is a real instrument to realise economic development, democratisation, and peace and stability – the crux of the foreign policy goals of the country.

The foreign and security policy is centred on development that benefits the people and creating conducive situations for such development. Ethiopia’s foreign policy continues to assert that the main security threat is of an internal nature. The danger is that widening poverty may lead to collapse, and that the absence of democracy and good governance may result in bloodshed and destruction.

This threat can be removed through overcoming poverty, through development and economic initiative. It is obvious that Ethiopia has a truly fragile and dependent economy. Therefore, rapid development is critical for the protection of its national interests and security.

Ethiopia’s relations of friendship or otherwise should be based first of all on economic matters; secondly, Ethiopia should not enter into hostilities or friendships based on matters irrelevant to its development; thirdly, external activity should focus on promoting business and investment opportunities, and identifying sources of aid and credit.

Fourthly, ensuring that Foreign Service officers realise that they are first of all development officers, and that they acquire the requisite competence to accomplish this mission. Lastly, the government should not view economic related tasks as just one of many in external activities, but rather to place economic work at the centre of foreign relations.

Economic diplomacy implies removing domestic and international handicaps of rapid development using diplomatic instruments, such as representation, protection, communication, negotiations and political pressure.

Econometrically stipulated Ethiopian economic diplomacy is paying off better than ever. For economic diplomacy to continue to play its appropriate role in the foreign policy of the country, it should work out the challenges and exploit the opportunities. And to continue to do so, it needs intuitive economic diplomats, who should be well versed in the processes, challenges and opportunities of globalisation, Ethiopia’s domestic priorities, trade and investment strategies, export marketing and investment assistance, market analysis, and priority markets and indicators, among others.

Challenges and opportunities in the Ethiopian foreign policy, and economic diplomacy particularly, can be grouped into internal and external challenges. Internal challenges and opportunities are those associated with internal socio-economic, geographic, ecological, demographic, cultural and political structure, and behaviour of the state, while external opportunities and challenges are attributed to the international economic, political, legal and institutional dominion.

The changing in image of the country for the better; experience gathered on how to do business diplomacy; increasing consensus on the mechanisms of doing and promoting economic diplomacy among actors; the positive experience of already established companies; relocation of emerging industries to Africa; political will and clear eyed policy and strategy of the government; the growing economy and positive rippling effect, and government’s efforts to improve the physical, infrastructural and institutional ease of doing business, are some of the opportunities brightening the prospects of economic diplomacy in the country.

Lack of coordination among stakeholders; world economic dynamism and the need to cope with it; the lack of competent and intuitive diplomats and professionals, stringent bureaucracy and the tug of war among economic diplomacy actors; growing economy and the growing sophistication of management; the inevitability of saturation, decreasing of the comparative advantage (labour cost increasing, land becoming politically contentious), competition from other African countries, increasing tension between political and economic priorities and recent political unrest, are among the constraints the government must be working out if economic diplomacy should continue to play the crowning role of ensuring the survival of Ethiopia as multi-national state.

The performance of Ethiopia’s economic diplomacy, qualitatively and quantitatively speaking, is encouraging. Economic diplomacy, in the 2008 Ethiopian fiscal year, has only managed to facilitate pre-investment visits of 1,021 small and medium sized and 68 giant companies, with the issuing of 372 investment licences.

Economic diplomacy was also, in same fiscal year, a platform for 4,451 individual investors to get together to discuss opportunities and challenges of doing business in Ethiopia. Giant companies, like PVH, Raymond, Tata International, Diageo, Brosche, GE, Arvind, H&M, and other global conglomerates, are already in Ethiopia.

But those achievements are not without challenges, leading to the recommendation that the Ethiopian government should manoeuvre towards solving those challenges to enable economic diplomacy to continue to play its crowning role of development.


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