We also discuss how the transition to stronger city diplomacy may have consequences for firms and their strategies for corporate diplomacy. We emphasize that national economic diplomacy should be better aligned with city diplomacy. We conclude that national policies on trade and investment cannot be divorced from innovation and knowledge strategies, and that these strategies cannot be divorced from cities. However, we also note that trade in services, particularly innovation-driven services, is concentrated in global cities, and traded between them, often within MNEs. National economic diplomacy has traditionally promoted trade and investment in goods, often through trade agreements and promotion agencies, and we explore the limitations of these tools as trade in services becomes more important.
Our framework distinguishes between national economic policies to promote trade and FDI, referred to as economic diplomacy, and comparable policies originating in cities, referred to as city diplomacy. First, the rising share of services, particularly innovation-driven digital and knowledge-based services, in foreign trade and multinational enterprise activity and second, the increasingly important role of global cities as home and hosts to these activities. We explore the public policy implications of two new, significant, and inter-related global phenomena.
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