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Importance of economic diplomacy for small and developing states


Discuss about the Research Proposal for Commercial/Economic Diplomacy of Small States and Case of Kosovo.

Historically, the wise use of the country’s economic potential brought conductive potential gains. In the modern times, where the business competitions have reached its peak, the creative diplomacy that caters economic concerns, usually called the economic is gaining pace (Woolcock 2013). This commercial independence is difficult to establish for the small states or nations such as partially recognized state in Southeast Europe, Kosovo. Most small and microstates are characterized with having constraints of acute resource, diseconomies of scale; geophysical constraints; vulnerability to natural disasters; susceptibility to external shocks; constricted economic base and concentrated of exports on a narrow range of commodities and markets; dependence on foreign resources and restricted small domestic markets (Van Bergeijk 2014). In these circumstances, the need for placing greater emphasis on economic diplomacy is now universally recognized. Consideration of growth of the economy must remain in the forefront of efforts to achieve of goal of the foreign policy. By considering economic diplomacy as one of the priorities of foreign policy, the permanent secretary of MFA, Kreshnik Gashi, stated that “through the diplomacy bilaterally we will provide foreign investors because the republic of Kosovo, offers favorable business and economic environment for investments of different types”.  This ministry of foreign affairs of Kosovo is also mentioned large investment projects such as several numbers of projects in the field of energy, mining and telecom to growth of the commercial/economic negotiation for the future growth of the nation.

In this research proposal, the researcher will discuss the research topic about the significance of the economic diplomacy of small states. The researcher will specifically concentrate the economic conditions of Kosovo, one of the disputed territory and partially recognized state of Southeast Europe. Stating the aim and the research objectives, the researcher will design the research hypothesis for conducting this research. By looking into the situational analysis about the research topic, the researcher will discuss the detailed literature by exploring secondary research in that section. Gathering all data and political and economical information, the researcher will analyze the beneficial impacts of the economic diplomacy for the development of Kosovo.

The aim of the research is to identify the potential of economic diplomacy for the economic growth of Kosovo. In this context the objectives of the research are as follows:

To understand the importance of the commercial/economic diplomacy of small and developing states such as Kosovo

To identify how economic diplomacy of small states can be beneficial for the development of the country

To understand the current general economic plan resulted in formalization of economic diplomacy for the growth of the nation

To identify unfamiliar economic conditions and Kosovo’s potentiality for the financial stability in the future

Economic diplomacy is often defined as the process of engagement of the foreign policy, with the task of aiding and encouraging economic activities outside the state of the boundaries (Newman and Visoka 2016). According to Creusen and Lejour (2013), economic diplomacy is important for extending the interaction between domestic and international factors and deals with the political and economic concerns of the nation. However Berridge (2015) stated that economic diplomacy is also beneficial for achieving non-financial goals. Even though the area of economic diplomacy is comparatively new, the studies in this discipline are increasing. The Republic of Kosovo was the self governing unit of the federal Yugoslavia until 1989, when the nation was revoked for their autonomous status under the leadership of thee Serbian leader, Slobodan Milosevic (Smith, Keukeleire and Vanhoonacker 2015). During that phase, the conventional political diplomacy played a significant role during and after crisis. Since then the economic diplomacy of Kosovo is still recognized as immature (Mamadouh et al. 2015). Even though the nation has encountered severe economic constraints, the role of the economic diplomacy in Kosovo, core to the economic security, tends to be widely ignored as it is not much prioritized (Phillips and Burns 2012). The importance of the economic diplomacy was firstly identified by the Ministry of Industry and Trade, Ministry of Foreign Affairs and Chambers of Commerce of Kosovo (Kinne 2014).

Beneficial impact of economic diplomacy for the development of Kosovo

In 2005 Kosovo made its foundation step for the direction of economic diplomacy by the establishment of “Investment Promotion Agency in Kosovo” (Keukeleire, Fonck and Métais 2015).This was initiated for the territory’s development through FDI. Once the nation get independence status in 2008, Kosovo started to work more insistently towards the integration in both financial and economic growth (Berna 2013). A year later of the independence the nation has become a full member of the World Bank, IMF and a few years later also the European Bank for Reconstruction and Development with getting support from the outside and through difficult negotiation. Now the Republic of Kosovo has built a stable democracy with the help of economic diplomacy that cannot be threatened by internal political strain. With the strength of democratic institutions, the country has been improving the overall economy and successfully creates jobs which have enabled the new government to quickly focus on its activity on immediate priorities. By engaging several foreign policies, the nation’s security and prosperity have become priorities which ensure that Kosovo is operating towards rightful place in the community of European nation. However, the economy of Kosovo is still in transition state and constantly finds international supports and encouragement from the influential Western power to improve the status of the developing economy. Now the government of Kosovo is still struggling to get the WTO membership. There are many economic indicators of Kosovo stated that the growth of the GDP is crucial, taking into the consideration of the global economic crisis, high inflation and the corresponding lowering FDI. However, many researchers have suggested that there are many scopes to ensure the economic growth of Kosovo in the future.

Based on the review of the literature, the researcher can develop the relevant research hypothesis to conduct the research in a most appropriate manner.

H1: the potential economic diplomacy of Kosovo can be beneficial for the strategic developments of the country.

H0: the potential economic diplomacy of small states does not considered as beneficial for the development of Kosovo

H2: the economic diplomacy can increase Kosovo’s weak economy

H0: the economic diplomacy does not increase Kosovo’s weak economy

Methodology is the philosophical framework within which the research is conducted. Based upon this foundation step, the researcher will conduct this research and data will be collected and analyzed with maintaining the relevance of research aim and objectives. By the use of various techniques and tools, the researcher will conduct this process. This research would need to select an appropriate as well as a proper research design in order to identify as well as demonstrate the significance and the impact of the commercial or the economic diplomacy of Kosovo. The purpose of the research design is for exploring particular aspects of the area of research. The researcher can select three kinds of research designs such as Explanatory, exploratory as well as descriptive research design.  The Descriptive design of research mainly gives the extra information regarding the topic of research. The researcher gathers information in this particular approach instead of making elaborate models or guesses for predicting the future. Apart from that, the Exploratory Research Design demonstrates as the initial research into the theoretical or the hypothetical ideas. Hence, the researcher has generated an observation in this particular research regarding the topic of the research. In addition, the explanatory design of research is demonstrated as an attempt for connecting concepts for understanding various issues associated with this particular research. The researcher would follow the descriptive design of research for this particular research. The researcher would be able to gain a deepened understanding of the significance or the impact of commercial or economic diplomacy of small states such as Kosovo by approaching this particular research design.

Current general economic plan resulted in formalization of economic diplomacy for growth

The researcher would also decide in this particular section the appropriate approach of gathering such data as well as information those are important for conducting this research. Hence, the Secondary data collection method would be utilized in this research to perform the entire data analysis. The secondary data collection method is necessary in order to conduct the extensive literature for this research regarding the subject of this particular research. Hence, in this secondary data collection method, the data sources would explore several books, peer-reviewed articles as well as journals regarding the significance as well as impact of the commercial or economic diplomacy of the small states like Kosovo. With the help of the data sources, the impact and the significance of the economic or commercial diplomacy of Kosovo would be discussed properly. Often, it is considered after the researcher has gathered some useful insight and understanding into the concerned impact by analyzing the secondary research. Hence, the researcher would explore the quantitative data to get the best outcomes of this research in relation to the topic.

To conduct this research successfully, the relevant data and information will be collected by the use of secondary data research method (O'Leary 2013). It is relevant to gather secondary data which have already been evaluated by different perspectives of several economists, scholars, and political advisers and analysts of Kosovo. Though the term of economic diplomacy is fairly new, but apparently the research and evaluation of this concept is rapidly acknowledged in many research scholars and political journals. Thus, it would be easy for the researcher to access the impacts of the economic growth of Kosovo by exploring various quantitative resources.

After gathering such data, the researcher will analyze to develop the research outcome. The quantitative data research method will set the hypothesis for determine the research outcome (Pickard 2012). Such developed hypothesis will deliver thee important and impacts of the research topic. The theme of the research will suggest whether the potential of economic diplomacy for Kosovo’s economic growth can be a beneficial affair as far as the development of the economic growth for the nation or not. Incorporating all these hypotheses into the quantitative data analysis method, the researcher will find the ultimate research outcome at the end of this research.








Research Activities








selection  of Research topic

Secondary data Collection

Prepare Layout

Literature Review

Research Plan proposal

Research technique selection

Collection of Secondary data

Data analysis

Data findings


Rough draft

Research work submission

(Source: Created by author)


Berna, I.B., 2013. The role of European economic diplomacy in the Western Balkans. Economics, Management and Financial Markets, 8(4), p.196.

Berridge, G.R., 2015. Economic and Commercial Diplomacy. In Diplomacy (pp. 210-224). Palgrave Macmillan UK.

Creusen, H. and Lejour, A., 2013. Market entry and economic diplomacy. Applied Economics Letters, 20(5), pp.504-507.

Keukeleire, S., Fonck, D. and Métais, R., 2015. 13 The EU’s structural diplomacy towards Kosovo. The Diplomatic System of the European Union: Evolution, Change and Challenges, 116, p.215.

Kinne, B.J., 2014. Dependent diplomacy: Signaling, strategy, and prestige in the diplomatic network. International Studies Quarterly, 58(2), pp.247-259.

Mamadouh, V., Meijer, A., Sidaway, J.D. and van der Wusten, H., 2015. Toward an urban geography of diplomacy: Lessons from The Hague. The Professional Geographer, 67(4), pp.564-574.

Newman, E. and Visoka, G., 2016. The Foreign Policy of State Recognition: Kosovo’s Diplomatic Strategy to Join International Society. Foreign Policy Analysis, p.orw042.

O'Leary, Z., 2013. The essential guide to doing your research project. Sage.

Phillips, D.L. and Burns, N., 2012. Liberating Kosovo: Coercive Diplomacy and US Intervention. Mit Press.

Pickard, A., 2012. Research methods in information. Facet publishing.

Smith, M., Keukeleire, S. and Vanhoonacker, S. eds., 2015. The diplomatic system of the European Union: evolution, change and challenges (Vol. 116). Routledge.

Van Bergeijk, P.A., 2014. Economic diplomacy and the geography of international trade. Edward Elgar Publishing.

Woolcock, S., 2013. European Union economic diplomacy: the role of the EU in external economic relations. Ashgate Publishing, Ltd..

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