Lali Khurtsia

Assistant professor

 PhD in Economics

 Ivane Javakhishvili Tbilisi State Univestity

Tbilisi, Georgia

Abstract

In the 21st century, the interdependence of global economies and the rise of geo-economic tensions have significantly elevated the strategic importance of economic diplomacy as a tool of national security. This paper explores the theoretical and practical intersections between economic diplomacy and economic security, drawing from liberal, realist, and neo-mercantilist schools of thought. It analyzes the functional roles of economic diplomacy, including preventive, resilience-enhancing, and predictability-building dimensions and demonstrates how these functions contribute to strengthening a country’s economic sovereignty and mitigating external vulnerabilities.

Through comparative case studies of Singapore, the Netherlands, and Turkey, the paper highlights how diverse national strategies utilize economic diplomacy to support sustainable development, geopolitical positioning, and risk management. The analysis shows that successful economic diplomacy can serve both as a growth mechanism and a strategic buffer against external shocks.

Despite Georgia’s extensive network of free trade agreements and pro-Western orientation, the country still lacks a coherent strategy for economic diplomacy. The paper recommends policy and institutional reforms aimed at integrating economic security considerations into foreign policy, strengthening public-private dialogue, and diversifying regional partnerships. These steps are essential to enhance Georgia’s resilience, credibility, and influence in the global economic system.

Keywords: economic diplomacy; economic security; resilience; international relations; trade policy; strategic autonomy; foreign policy; geo-economics; national interests; institutional coordination; global competitiveness

 

Introduction

In the global political and economic landscape of the 21st century, the strategic interests of states are increasingly intertwined with economic factors. Alongside traditional military and diplomatic tools, growing importance is being placed on economic security and economic diplomacy as mechanisms for shaping contemporary international relations and safeguarding national interests.

Economic security encompasses a state’s ability to ensure the resilience of critical sectors such as energy supply, access to food and medicine, financial stability, and resistance to external economic and political shocks. In a context where the global economic order is in flux, economic security is no longer merely a dimension of development—it has become a central prerequisite for national and regional stability.

Economic diplomacy has become an important instrument through which states protect their economic interests, expand global connections, diversify markets to reduce risks, establish strategic partnerships, and employ trade, investment, and technological cooperation within the framework of foreign policy. The institutionalization of economic relations often replaces traditional political negotiations and creates new conditions for global competition.

The role of economic diplomacy is particularly significant for countries like Georgia, which is located in a geopolitically important region and is heavily dependent on external economic processes. Economic diplomacy serves not only as a tool for development but also as a lever for supporting stable security.

This paper aims to provide a critical review of the existing literature on economic diplomacy as a determinant of stable economic security. It examines theoretical approaches, analyzes the practical application of diplomatic instruments based on country examples, and discusses how the role of economic diplomacy is reflected in the context of economic security.

The analysis of the concepts presented in this article is structured as follows:

We review the conceptual and theoretical foundations of economic security, with a focus on the evolution of the security paradigm—from military to economic—highlighting energy, financial, food, and technological security as core components; Next, we examine the theories and functions of economic diplomacy; and finaly, we analyze the impact of economic diplomacy on economic security based on both theoretical perspectives and practical case studies.

Theoretical Foundations of Economic Security

The concept of economic security emerged relatively late in the security discourse, but today it occupies a central place in the strategic agendas of states and international organizations. Traditionally, the notion of security was associated with military threats and the protection of national territory. However, since the 1990s, contemporary theorists have begun to conceptualize security as a multidimensional phenomenon, where economic factors play a role as decisive as military or politico-diplomatic elements.

Barry Buzan (1991) views security as a complex system encompassing five sectors: military, political, economic, social, and environmental. According to his model, economic security is defined by a state’s and society’s ability to withstand internal and external economic pressures without harming the country’s independence, prosperity, and stability. In Buzan’s interpretation, the economy is not just a platform for economic growth but a pillar of national security.

Ken Booth and Nicholas Wheeler (1992) associate security with the idea of collective human well-being, emphasizing that security cannot be defined solely in military terms. In this view, economic stability, healthcare, employment, and income distribution are considered critical components of security theory.

David Baldwin (1997) emphasizes that economic security is a multidimensional phenomenon and cannot be defined unambiguously. He considers security on both individual and state levels and introduces the principle of expectancy—how likely it is that a state can operate within a secure economic environment. According to Baldwin, economic security includes the ability to respond to threats such as inflation, unemployment, trade dependency, growing debt, economic sanctions, and global crises.

Contemporary literature often defines economic security as a combination of systemic resilience and vulnerability management. This approach emphasizes the presence of mechanisms that ensure the proper functioning of the economic system under crises, global shocks, and political pressures.

Key indicators of economic security include:

• The level of independence in energy and food supplies
• Stability of the financial system
• Access to capital and markets
• Functionality of critical infrastructure
• Degree of diversification in foreign trade

The concepts of systemic resilience and vulnerability management significantly expand classical security theories, helping policymakers better understand the stability of economic systems under shocks and crises.

Systemic resilience is defined as the ability of a system—be it a state, region, or sectoral economy—to withstand external pressure, maintain core functionality, and, if necessary, adapt or transform in response to new environmental conditions. This concept gained prominence after the 2008 financial crisis, the COVID-19 pandemic, and global energy shocks.

J. Joseph (2013) interprets systemic resilience as part of a modern, neoliberal security framework, where responsibility for resilience is partly delegated not only to state institutions but also to the private sector, local governments, and civil society organizations. Similar approaches are found in annual reports by the World Bank and OECD (2014–present), which link economic security with maintaining stability and adapting to challenges.

Adam Rose and Shu‑Yi Liao (2005) study how economic agents respond under crisis or disaster conditions (e.g., floods, earthquakes), and whether they can maintain systemic resilience and effective functioning during such events. In subsequent works (Rose & Wei, 2013; Rose et al., 2007), they emphasize that systemic resilience depends significantly on the ability to use investments and alternative resources aimed at the economy’s rapid recovery.

Martin & Sunley (2015, 2020) examine regional economic resilience and are among the most influential researchers in this field. Their work focuses on how economic systems—especially at local and sectoral levels—respond to external shocks and what mechanisms enable recovery or adaptation. For Martin and Sunley, economic resilience is not merely about one-time responses to crises but a dynamic process involving:

• Vulnerability – how exposed the region is to external shocks
• Resistance – the ability to avoid or minimize harm
• Impact – the actual damage caused by the shock
• Recovery – the speed and quality of return to pre-crisis levels
• Transformation – the ability to emerge with a more resilient structure

They apply their model to analyze, for example, the effects of the 2008 financial crisis on local markets, the impact of COVID-19 on SMEs, and compare how different regions handle industrial recessions.

Martin & Sunley’s framework highlights that economic security is not just a political game at the state level, but the capacity of multi-level economic organization to adapt and maintain stability under constantly changing global conditions.

A second key concept is vulnerability management, which focuses on identifying and reducing the factors that make economies susceptible to external pressures. These may include dependency on energy imports, low trade diversification, high sectoral concentration, or lack of investment.

Susan Cutter et al. (2003, 2008) developed the hazard vulnerability framework, integrating economic, social, and infrastructural factors. Initially designed for environmental and climate risk assessments, this model has since been applied to economic security analysis.

Cutter aims to identify what makes a society vulnerable to disasters, economic crises, and other shocks. Her model includes:

• Hazard Exposure – the shock or threat impacting the system (e.g., financial crisis, energy shortage)
• Social Vulnerability – societal factors that amplify the impact (e.g., low income, poor infrastructure, limited education, inequality)
• Place-based Factors – local specifics like economic diversity, governance effectiveness, population mobility, social networks
• Mitigation & Response Capacity – the system’s ability to cope: preparedness, early warning systems, recovery speed

Cutter expresses this concept through the formula:

Risk = Hazard × Vulnerability

This highlights that risk is not only determined by the size of the hazard but also by the degree of vulnerability of the exposed subject.

Cutter’s framework fits well in developing countries like Georgia, where it enables analysis of how well the country can cope with economic shocks, which internal factors increase or decrease vulnerability, and how economic diplomacy might help mitigate these vulnerabilities.

Eriksen & Kelly (2007) argue that vulnerability management is closely linked to development policy, particularly in small and developing countries where exposure to external shocks is high and institutional response capacity is limited.

They view vulnerability not as a natural outcome, but as the result of socio-economic, institutional, and political-historical processes that make some regions or groups more vulnerable than others. Their analysis includes issues like access to economic resources, structural barriers, and legacies of past policy decisions.

According to Eriksen and Kelly, statistical indicators (e.g., poverty rates, trade dependency) are not enough. Effective assessment must include context-sensitive indicators such as local knowledge, political engagement, strategic planning capacity, and quality of governance.

They warn of the “technocratic trap”—adaptation policies based solely on metrics may ignore social roots of vulnerability, deepen inequality, and generate secondary risks or inefficiencies in resource use.

Their model is particularly relevant for countries like Georgia, which face economic colonialism, geopolitical pressure, weak institutions, and struggle to design inclusive policies for vulnerable groups. For example, Georgia’s energy security is fragile due to dependence on Russia; agriculture is climate-vulnerable and adaptation policies have often failed to meet farmers’ needs; and economic diplomacy sometimes overlooks structural roots of internal vulnerability such as regional inequality.

In sum, resilience and vulnerability management are deeply interconnected: a system’s vulnerability determines its need for resilience. For instance, heavy dependence on a single trade partner increases vulnerability, while market diversification and balanced investment strategies form the foundation of resilience.

In modern economic security analysis, these concepts are linked to practical instruments like:

• National crisis response plans
• Strategic reserves policies
• Trade and investment partner portfolio management
• Investment risk assessment systems

Ultimately, these approaches show that economic security extends beyond traditional economic policy and encompasses broader strategic contexts—sovereignty, political stability, and social equity. While scholars like Buzan and Baldwin treated economic security as a systemic challenge, contemporary authors propose a dynamic framework where security is defined not by status but by the system’s capacity to act in crisis situations.

Theoretical Foundations of Economic Diplomacy

With the rise of globalization and increasing geo-economic rivalries, economic diplomacy has assumed a central role in foreign policy strategies. It encompasses the set of instruments used by states to achieve economic interests, including trade liberalization, investment promotion, technological cooperation, trade agreements, sanctions, and development assistance mechanisms. Economic diplomacy functions both as a tool for economic growth and as a mechanism for protecting and positioning national interests in global affairs.

Economic diplomacy operates on both bilateral levels (through a wide range of agreements) and multilateral platforms—such as participation in international economic organizations like the WTO, IMF, OECD, and others.

The theoretical interpretation of economic diplomacy is mainly based on three major schools of thought: liberalism, realism, and neo-mercantilism, each of which offers a distinct perspective on the role of the state in international economic relations.

Liberalism

Liberal theory argues that international economic relations foster cooperation and interdependence, reducing the likelihood of conflict and enhancing global stability.

Keohane & Nye (1977) developed the Theory of Complex Interdependence, which posits that economic ties make states mutually dependent, thereby making military confrontation less likely.

From a liberal perspective, economic diplomacy is seen as a tool for promoting cooperation and strengthening a rules-based global economic system.

Realism

The realist approach views economic diplomacy primarily as an instrument of state power projection. For the state, economic resources are equivalent to military capabilities—they serve as mechanisms for pressure, coercion, or control.

Economic sanctions, technological restrictions, and tariff barriers are classic examples of realism in economic diplomacy.

Robert Gilpin (1987) describes the international economy as an arena of power relations, where strong states can manipulate the global economic order using informal rather than formal tools.

Neo-Mercantilism

The neo-mercantilist perspective views economic diplomacy as a state-controlled tool to safeguard national interests—primarily against external competition.

Its three core principles are:

• Maintaining a trade surplus
• Protecting strategic sectors
• Reducing external dependencies

Robert Gilpin (1987), in The Political Economy of International Relations, argues that international economics reflects power and interests. The state’s goal, for him, is not integration into a global liberal order, but rather mobilization of economic tools to enhance political security.

Susan Strange (1994), in States and Markets, asserts that despite globalization, states remain central actors in the economic game and frequently use economic policy as a tool of power preservation.

Eric Helleiner (2002), in his work Economic Nationalism as a Challenge to Economic Liberalism, explains neo-mercantilism as a modern form of economic nationalism that obliges the state to promote local production, reduce external vulnerability, and enhance economic sovereignty.

Friedrich List (1841), though a 19th-century thinker, laid the ideological foundation for contemporary neo-mercantilism in his work The National System of Political Economy. He argued that liberalism works only when economically strong actors are on equal footing—while weaker states require protective policies.

In this context, economic diplomacy serves both protective and mobilization functions—it is used to balance competition and reinforce sovereign positions on the international stage.

Functional Dimensions

In practice, economic diplomacy encompasses the following key areas:

• Trade diplomacy – promoting trade and improving access to markets
• Investment diplomacy – attracting foreign direct investment (FDI)
• Sanctions policy – applying economic pressure to achieve strategic state goals
• Innovation diplomacy – fostering technological cooperation and addressing digital economy issues
• Economic branding – positioning the country as an attractive trade and investment partner

How Can These Approaches Be Applied to Georgia?

Understanding the theoretical foundations of economic diplomacy is particularly important for Georgia for the following reasons:

• The country’s economy is highly dependent on external markets and foreign investment
• Its geopolitical location gives it a corridor function, which—if supported by effective diplomatic policy—can be turned into a strategic advantage
• Association agreements with the EU and other partners are the result of successful economic diplomacy
• In a region marked by growing instability, economic diplomacy could serve as a means to strengthen national security

The Impact of Economic Diplomacy on Economic Security

In today’s global landscape, economic diplomacy is no longer merely a means for advancing national economic interests; it is increasingly recognized as a multi-functional instrument of national security. In a world where both internal and external vulnerabilities of states are on the rise, economic diplomacy serves as a proactive mechanism for risk mitigation, prevention, and resilience-building.

The influence of economic diplomacy on economic security can be understood through three core functional dimensions:

1. Preventive Function

Economic diplomacy reduces the likelihood of strategic threats and helps identify vulnerabilities before they escalate into crises. Tools such as trade agreements are actively used to shield the economy from external risks like sanctions, logistical disruptions, and supply chain shocks. These instruments create an added layer of security that underpins economic stability.

A notable case is the 2019 Japan–South Korea trade conflict, when Japan restricted the export of three critical high-tech materials—fluorinated polyimides, photoresists, and hydrogen fluoride—to South Korea. These materials are essential for semiconductor and display production, which are vital sectors for South Korea (e.g., Samsung, SK Hynix). While Japan cited national security concerns, the move was widely interpreted as a reaction to a South Korean court ruling demanding compensation for wartime forced labor. This strategic denial of key resources represented a targeted economic coercion effort.

South Korea responded by diversifying imports and ramping up domestic production, leading to a partial lifting of restrictions by 2023. This case illustrates how supply chain disruptions can function as geopolitical pressure tools in the absence of formal sanctions (Sources: Council on Foreign Relations, 2019; Kim, H. (2020), Journal of East Asian Studies).

Another instructive case is China’s de facto coal import ban on Australia in late 2020, imposed after Australia called for an independent investigation into COVID-19’s origins. While never officially acknowledged as a sanction, the ban was widely understood as political retaliation. In response, China diversified its coal imports, sourcing more from Mongolia, Indonesia, and Russia. Although the ban has since been partially relaxed, import levels remain below pre-ban volumes. (Sources: Zhang, M. (2021), The Diplomat; Drysdale, P. (2022), East Asia Forum)

Similarly, in 2021, Saudi Arabia and its allies (Kuwait, Bahrain) recalled their ambassadors from Lebanon and imposed a trade blockade after a Lebanese minister criticized Saudi involvement in Yemen. The blockade severely impacted Lebanon’s agricultural exports and logistics, worsening its economic crisis and showcasing how border closures and trade embargoes can serve as prolonged tools of geo-economic pressure. (Sources: BBC News, 2021; Gause, F. G. (2022), Foreign Affairs & International Relations Review)

These examples demonstrate how export restrictions, trade route disruptions (e.g., Suez or Panama Canal blockages), logistical bottlenecks, or even energy supply cuts (e.g., gas pipeline sabotage) function as preventive tools within economic diplomacy.

Additionally, sanction diplomacy is employed to deter hostile actors. U.S. and EU sanctions against Iran, Venezuela, North Korea, and Sudan exemplify this approach, aiming to pressure governments to revise technological and political behaviors perceived as threats to global peace and stability.

2. Resilience-Building Function

Through economic diplomacy, countries can enhance institutional and structural capacity to absorb and adapt to external shocks. Trade diversification, foreign direct investment (FDI), and strategic partnerships strengthen the economic base and reduce dependence on vulnerable sectors or single trade partners.

South Korea responded to disruptions in semiconductor and battery supply chains (exacerbated by the pandemic and U.S.–China tensions) by pursuing multilateral and bilateral trade agreements (e.g., RCEP, CEPA with India, rare-earth deals with Japan, Australia, Vietnam) and launching the “K-Semiconductor Belt” initiative to boost domestic capabilities. (Source: Wilson Center, 2022)

Chile, vulnerable to climate-related agricultural risks, responded with over 60 FTAs and international cooperation in water management with Israel, the Netherlands, and Canada. The “Chile on the Move” program helped improve technological resilience and opened new East Asian markets. (Sources: Alliance for Water, Berkeley’s Center for Belonging)

Australia, following China’s coal import ban, accelerated export diversification and initiated rare-earth production. Strategic deals with the U.S. and Japan reduced reliance on Chinese markets and reinforced economic sovereignty. (Sources: News.com.au, The Australian, 2022)

These examples highlight how economic diplomacy helps build economic resilience in the face of trade tensions, logistical crises, and strategic decoupling.

3. Predictability Function (Stability & Credibility)

Economic diplomacy plays a pivotal role in enhancing the predictability and credibility of a country’s economic environment by fostering rule-based international engagements and transparent policy frameworks. This function is particularly vital for attracting foreign investment, maintaining stable trade relations, and integrating into the global economy.

Rule-based frameworks enhance credibility

By participating in multilateral institutions such as the World Trade Organization (WTO) and aligning domestic regulations with international norms, countries reduce uncertainty for global partners and investors. These rule-based commitments act as “credibility anchors”, reassuring market actors about long-term stability.

According to North (1990), institutions that reduce uncertainty in exchange reduce transaction costs and make investment more likely. Similarly, Büthe & Milner (2008) show that countries entering trade agreements or investment treaties signal reliability and a lower risk of expropriation or arbitrary policy shifts.

Credible commitments attract long-term investment

The credibility of a country’s economic institutions significantly affects its ability to attract FDI. For instance, countries that enter bilateral investment treaties (BITs) or deep trade agreements such as the EU Association Agreements commit themselves to transparency, dispute resolution mechanisms, and protection of investors’ rights—all of which enhance predictability.

Example – Georgia’s Deep and Comprehensive Free Trade Area (DCFTA):

Georgia’s agreement with the EU not only improved access to the European market but also required the country to adopt EU-compatible regulatory frameworks. This, in turn, increased investor confidence and led to a rise in long-term investments in agriculture, logistics, and energy. (Source: European Commission DCFTA Report on Georgia, 2021)

Economic branding builds global trust

Economic diplomacy also involves strategic branding, where countries shape their international economic image as reliable, transparent, and innovation-friendly. This soft-power element contributes to predictability by reducing reputational risks and improving investor and partner perceptions.

For example, Singapore’s reputation as a hub of legal transparency and regulatory efficiency is a deliberate product of its economic diplomacy and branding strategies. (Source: Kurlantzick, J. (2007). Charm Offensive: How China’s Soft Power Is Transforming the World)

This function underscores that predictability is not passive—it is actively constructed through institutional alignment, consistent policies, and strategic communication. Countries that use economic diplomacy to build stable, rules-based economic environments enjoy stronger resilience and global positioning.

International Examples of Economic Diplomacy

Analyzing successful practices of economic diplomacy allows us to better understand how countries utilize economic policy both to expand foreign influence and to strengthen internal economic resilience. As discussed above, we explored several examples of economic diplomacy aligned with its preventive, resilience-building, and predictability-enhancing functions. Below are three selected case studies—Singapore, the Netherlands, and Turkey—which can serve as relevant comparisons for Georgia.

Singapore – A Model of Economic Diplomacy for Small States

Key Features:

• No natural resources; complete dependence on external trade.
• Active economic diplomacy as a guarantee of national security.
• The Ministry of Foreign Affairs operates an Economic Department that closely collaborates with the business sector.

Instruments and Results:

• Over 27 Free Trade Agreements (FTAs) signed.
• Among the highest shares of Foreign Direct Investment (FDI) globally.
• The “Singapore Inc.” model – state and private sector operate under a unified strategy.

Takeaway for Georgia: Small size and lack of natural resources are not obstacles to active economic diplomacy. The state must project an open, predictable, and business-oriented image on international markets.

The Netherlands – Diplomatic Tools of an “Open Economy”

Key Features:

• One of the largest exporters in agriculture and high-tech sectors.
• Implements differentiated economic diplomacy: combining aid and investment for developing countries; innovation-focused collaboration with developed economies.

Instruments and Results:

• Sectoral special envoys (e.g., water management, agriculture).
• Economic missions: delegations uniting diplomats, businesses, and academia.

Takeaway for Georgia: Sectoral specialization and multi-stakeholder engagement can enhance international credibility and influence.

Turkey – Economic Diplomacy as a Geopolitical Lever

Key Features:

• Uses economic diplomacy as a form of “soft power” to influence neighboring regions.
• Actively pursues investments, trade agreements, and infrastructure projects in Central Asia, Africa, and the Balkans.

Instruments and Results:

• The Foreign Economic Relations Board (DEİK) serves as a business diplomacy ecosystem.
• TİKA (Turkish Cooperation and Coordination Agency) – a development assistance mechanism that deepens economic engagement.

Takeaway for Georgia: Economic diplomacy can be strategically employed to strengthen regional positioning and political-economic influence, particularly in highly competitive zones (e.g., the Black Sea region).

Thus, Singapore’s effective mobilization, the Netherlands’ breadth of engagement, and Turkey’s geopolitical orientation demonstrate that economic diplomacy—both as a theoretical and practical tool—can be tailored to suit the specific context of each country.

For Georgia, a geopolitically significant yet economically small state, the following lessons may be applied:

• Developing tailored strategies and thematic specialization (e.g., green energy, logistics),
• Deepening economic interaction through diplomatic formats,
• Enhancing economic security through preventive guarantees and diversified partnerships.

A comparative table summarizing these findings is presented below for clarity.

Country	Key Characteristics	Instruments Used	Results	Lessons for Georgia
Singapore	No natural resources; trade-dependent; economic diplomacy as security tool	27+ FTAs; strong FDI policy; unified public-private strategy	High FDI inflow; strong international image	Small size is not a barrier; build open and business-friendly image
Netherlands	Major exporter of agriculture & tech; diversified diplomacy by country type	Special envoys by sector; economic missions combining diplomats, businesses, academia	Sector-specific impact; high international credibility	Leverage sectoral strengths; promote inclusive diplomatic missions
Turkey	Uses economic diplomacy for geopolitical influence in neighboring regions	DEIK business ecosystem; TIKA development assistance; strategic investments	Enhanced regional influence; growing economic ties in Africa, Balkans	Use targeted investments and diplomacy for regional positioning

Thus, although the review of major theories does not aim to provide a comparative analysis, we can still summarize the key conclusions regarding Georgia’s economic security and diplomacy:

• Lack of strategic conceptualization – Unlike Singapore, Georgia lacks a unified vision for economic diplomacy. A national strategy needs to be developed that clearly outlines priority sectors (e.g., energy, transit, IT, agro-exports).
• Deficit of institutional coordination – There is no stable linkage between the government and the business community to represent economic interests. The establishment of a dedicated structure (e.g., “GeoTrade” or “InvestGeo”) could help bridge this gap.
• Underdeveloped regional policy – Georgia often plays a reactive role in Black Sea regional dynamics. There is a need for preventive and targeted instruments for regional engagement.
• Insufficient integration of economic security – In Georgia’s case, economic diplomacy does not fully fulfill its security function. To address this, it should be integrated into the broader security policy framework (e.g., energy security agreements, strategic reserves systems, etc.).

Conclusions and Recommendations

In the 21st century, the growing interdependence of economies and the diversification of global threats have assigned new significance to the concepts of economic security and economic diplomacy. This study demonstrates that these two concepts are closely interconnected: economic diplomacy is no longer merely a tool of foreign trade or investment policy, but has become a central lever of economic security.

The theoretical analysis of the literature has revealed the following insights:

• The liberal school views economic diplomacy as a mechanism for preserving peace and global stability;
• The neo-mercantilist perspective frames it as a tool for ensuring economic autonomy and managing vulnerability;
• Contemporary concepts of economic resilience emphasize the capacity of states to withstand external shocks and restore economic balance post-crisis;

International case studies—including those of Singapore, the Netherlands, Turkey, and China—illustrate how effective economic diplomacy enables states not only to position themselves in global markets, but also to construct flexible security architectures based on partnership, credibility, and multilateral cooperation.

For Georgia, a geopolitically vulnerable and resource-constrained country, these concepts are critically important. Despite its free trade agreements and pro-Western strategic orientation, Georgia still lacks:

• a coherent strategic vision for economic diplomacy;
• institutional coordination and active engagement of the private sector;
• proactive lobbying of economic interests at the foreign policy level.

Therefore, a new policy framework is needed to support Georgia’s economic security and diplomacy, one that:

• is tailored to the country’s real needs and capabilities,
• incorporates sectoral priorities and regional strategies, and
• is grounded in resilience-oriented economic approaches.

Recommendations

The following recommendations are outlined to strengthen economic diplomacy and economic security in the Georgian context:

Strategic Policy Level

• Georgia needs a clearly defined economic diplomacy strategy that outlines priority sectors (e.g., energy, transport, agro-exports, ICT) and geographic priorities (EU, Central Asia, Middle East, East Africa).
• Economic security must be integrated into the national security strategy—resilience and vulnerability management should be formalized as an independent pillar of the country’s national security framework.
• Coordination between external affairs and economic institutions must be significantly strengthened through the creation of a joint platform involving the Ministry of Foreign Affairs, Ministry of Economy, and business associations to lobby national economic interests.

Institutional Level

• Specialized training in economic diplomacy should be offered to diplomatic personnel, including areas such as trade, investment, economics, and strategic planning.
• Public–private dialogue must be deepened—business actors should be included in diplomatic negotiations as expert contributors (e.g., in trade missions), particularly when exploring new markets.
• Economic intelligence and analytical capacity should be enhanced through systematic data collection and analysis of global risks and geo-economic dynamics. Establishing an Economic Security Monitoring Center could support this goal.

Regional and International Level

• Georgia should economize its transit potential—leveraging geographic positioning not just as a passage corridor, but as a tool of economic influence. This includes transforming logistics platforms into instruments of economic diplomacy.
• Independent partnerships must be deepened beyond the Euro-Atlantic space, especially in Asia and the Middle East, to reduce over-dependence on any single market.
• Sustainable development goals (SDGs) and climate diplomacy should be integrated into the economic diplomacy agenda, including promotion of green investment initiatives.

Scientific and Educational Level

Thematic research in economic security and diplomacy should be supported through dedicated research grants and institutional funding.

Academic programs should be developed in universities, introducing specialized courses or modules such as: Economic Security and Global Affairs; Economic Diplomacy and Geo-economics.

Bibliography

Alliance for Water; Berkeley’s Center for Belonging. (n.d.). Water resilience for Santiago de Chile. https://www.alliance4water.org / https://belonging.berkeley.edu

Baldwin, D. A. (1997). The concept of security. Review of International Studies, 23(1), 5–26. https://doi.org/10.1017/S0260210597000053

Booth, K., & Wheeler, N. J. (1992). Security dilemma: Fear, cooperation and trust in world politics. International Affairs, 68(3), 571–581. https://doi.org/10.2307/2621949

Büthe, T., & Milner, H. V. (2008). The politics of foreign direct investment into developing countries: Increasing FDI through international trade agreements? American Journal of Political Science, 52(4), 741–762. https://doi.org/10.1111/j.1540-5907.2008.00340.x

Council on Foreign Relations. (2019). Japan–South Korea trade dispute: High-tech exports and historical disputes. https://www.cfr.org

Cutter, S. L., Barnes, L., Berry, M., Burton, C., Evans, E., Tate, E., & Webb, J. (2008). A place-based model for understanding community resilience to natural disasters. Global Environmental Change, 18(4), 598–606. https://doi.org/10.1016/j.gloenvcha.2008.07.013

Cutter, S. L., Boruff, B. J., & Shirley, W. L. (2003). Social vulnerability to environmental hazards. Social Science Quarterly, 84(2), 242–261. https://doi.org/10.1111/1540-6237.8402002

Drysdale, P. (2022). The limits of China’s economic coercion. East Asia Forum. https://www.eastasiaforum.org

Eriksen, S. H., & Kelly, P. M. (2007). Developing credible vulnerability indicators for climate adaptation policy assessment. Mitigation and Adaptation Strategies for Global Change, 12(4), 495–524. https://doi.org/10.1007/s11027-006-3460-6

European Commission. (2021). DCFTA implementation report – Georgia. Brussels: Directorate-General for Trade. https://trade.ec.europa.eu

Gause, F. G. (2022). Middle East power politics and the limits of soft balancing: The Gulf crisis and the failure of Saudi economic statecraft. Foreign Affairs & International Relations Review.

Gilpin, R. (1987). The political economy of international relations. Princeton University Press.

Helleiner, E. (2002). Economic nationalism as a challenge to economic liberalism? Lessons from the 19th century. International Studies Quarterly, 46(3), 307–329. https://doi.org/10.1111/1468-2478.00236

Joseph, J. (2013). Resilience as embedded neoliberalism: A governmentality approach. Resilience, 1(1), 38–52. https://doi.org/10.1080/21693293.2013.765741

Keohane, R. O., & Nye, J. S. (1977). Power and interdependence: World politics in transition. Little, Brown and Company.

Kim, H. (2020). Export control as economic statecraft: Japan’s 2019 measures against South Korea. Journal of East Asian Studies, 20(1), 1–24. https://doi.org/10.1017/jea.2020.1

Kurlantzick, J. (2007). Charm offensive: How China’s soft power is transforming the world. Yale University Press.

List, F. (1841). Das nationale System der politischen Ökonomie. Stuttgart: J.G. Cotta’scher Verlag.

Martin, R., & Sunley, P. (2015). On the notion of regional economic resilience: Conceptualization and explanation. Journal of Economic Geography, 15(1), 1–42. https://doi.org/10.1093/jeg/lbu015

Martin, R., & Sunley, P. (2020). Regional economic resilience: Evolution and evaluation. In P. Nijkamp & J. Poot (Eds.), Handbook on regional economic resilience. Edward Elgar Publishing.

News.com.au; The Australian. (2022). Little-known Aussie company takes on China. https://www.news.com.au

North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press .

Rose, A., & Liao, S. Y. (2005). Modeling regional economic resilience to disasters: A computable general equilibrium analysis of water service disruptions. Journal of Regional Science, 45(1), 75–112. https://doi.org/10.1111/j.0022-4146.2005.00365.x

Rose, A., & Wei, D. (2013). Economic resilience to natural hazards: A framework and future directions. The BE Journal of Economic Analysis & Policy, 13(2), 1–29. https://doi.org/10.1515/bejeap-2012-0046

Rose, A., Oladosu, G., & Liao, S. Y. (2007). Business interruption impacts of a terrorist attack on the electric power system of Los Angeles: Customer resilience to a total blackout. Risk Analysis, 27(3), 513–531. https://doi.org/10.1111/j.1539-6924.2007.00912.x

Strange, S. (1994). States and markets: An introduction to international political economy. Pinter Publishers.

Wilson Center. (2022). Technology and supply chain resilience: Opportunities for US-Korea cooperation. https://5g.wilsoncenter.org

Zhang, M. (2021). China’s coal ban on Australia backfires. The Diplomat. https://thediplomat.com