To be a good commercial promotion officer its is essential to build broad and deep relationships with business and trade associations both in the home country and in the host country. The first step towards being a competent economic officer is to know your host and target markets. It is vital to know the strengths of both economies to be able to detect opportunities. Therefore, research is an indispensable tool for economic officers who want to get results. Throughout the time posted in a foreign country, commercial officers should read the press, specialized business journals, trade publications and reports published by think-tanks, or others to be on top of the latest information available. This knowledge will allow commercial officers to look for the right contacts, identify opportunities and speak on the same terms and the business community.
One of the main activities of an economic/commercial officer should be to engage with the local business community. One way to engage with the business community can be to organize a conference or panel with the local chamber of commerce to inform them about one’s own country. This first approach will allow the local business community to get familiarized with the main characteristics and opportunities available in the country of origin. Unless this is a follow-up or the commercial relation is very mature, the initial approach to the local chamber of commerce should provide basic information about the country of origin, including demography, the system of government and main economic activities and strengths. If the Ambassador or Head of Missión gives the conference, the impact will be more significant. The commercial attaché should reinforce the initial awareness by pursuing further participation in round tables, seminars, tradeshows and other events.
As the relationships develop and the commercial officer can increase the business appetite in his country of origin, he ought to promote the organization of trade missions. Both incoming and outgoing trade missions are important and should be pursued according to the expressed interest of the business community. The trade missions that yield the best results are the ones who have clear objectives and have activities to accomplish these objectives; for the most part, business tourism should be avoided. The role of the economic officer in organizing trade missions is vital. Aside from coordinating activities, the economic officer has to be involved in the selection of participants and the construction of a productive agenda. The commercial officer also has the responsibility to explain to both host and visiting parties if there are specific business practices and other cultural idiosyncrasies so as to facilitate the conversations without misunderstandings.
Other actions that help promote economic activities between countries are the establishment of binational business councils. In the best-case scenario, the establishment of a binational business council will promote permanent business contacts and will help institutionalize the relationship. In turn, it is possible to pursue the establishment of specific working groups that can specialize in conversations around particular industries or obstacles to be surpassed to increase business transactions, for instance: a working group discussing mining, agriculture, or considering customs facilitation measures.
To recap, a successful commercial officer has to be knowledgeable about both the sending and the receiving countries ́ economies. He has to be able to engage with the private sector in both places, through business groups and directly with companies in strategic industries. He has to have the insight to get the business groups talking to each other and the common sense for identifying opportunities that can result attractive for both groups.
What is the role for Embassies
Many embassies around the world have the political task to represent one’s own country and the economic task to promote investment that could benefit the home country. The economic responsibilities of Embassies have been evolving from a low-level task performed by junior diplomats to one of the most important jobs for foreign representatives as has been noted by Dr. Kishan Rana “For most countries the promotion of their country’s external economic interests is the top diplomatic priority”. Since most countries are in search of economic growth opportunities, the competition between countries to receive more foreign direct investment is fierce. Some of the main elements of the work done by embassies to secure investments are the following.
As with trade promotion, embassies must know very well the economic characteristics and strengths of both the home country and the host country. This knowledge will help in the design of the right narrative (extensive approach) to entice investors to get interested in the home country and the search for potential investors that are a good fit (intensive approach).
One of the Embassy’s main task is to promote a positive narrative (extensive) of its own country in the host country. To build and promote these narratives, embassies have to highlight certain characteristics that stay in the mind of the host countries’ population and the business community. It is essential to promote these narratives by participating in public events, conferences, to use the media, to make use of networking opportunities and in some cases to have advertising campaigns to get the word out.
On the other hand, getting to know tentative potential investors has to do with the natural competitive advantages a country might have and the economic policy objectives it has defined. For example, a country rich in minerals can expect foreign investment from a country that has the capital and expertise in the same industry. As an example here is a recent interview given by Diego Stacy Ecuador’s Ambassador to Canada: “With Canada as Ecuador’s “main” direct investor through mines and the extractive sector, the Latin American country’s ambassador says he sees opportunity for growth and an increased “political will” to formalize trade relationships.” (Allen, The Hill Times, 18 December 2019). Ecuador has clearly understood that the most important source of investment from Canada has to be from the extractive sector.
In the home country, the embassies have to promote coordination with different actors: government, subnational governments and the private sector. Aside from work done by diplomats abroad, the most important factors to increase a countries attractiveness for Foreign Investment are decided internally. The foreign service should promote transformation in the home country that increase the attractiveness towards FDI.
A country should make sure it’s regulation is suited to try to attract FDI; a robust rule of law will always give investors confidence. To get investment, a country should facilitate the creation of competitive markets and allow the participation of foreign companies. If a country is part of a trade block or has trade agreements, this can be a positive element to attract foreign investment. Countries frequently leverage the construction of infrastructure projects with foreign investment. These projects should be productive and the bidding process transparent. Finally, national and subnational governments often seek to lure investors through fiscal incentives, particularly when a company is deciding between two potential locations.
These are some of the actions that can result in attracting FDI when pursued by embassies abroad in coordination with authorities in the home country.