The Rise of Economic Diplomacy at Regional Level

01. From national diplomacy to multi-level diplomacy.

Traditional diplomacy was designed around sovereign states. States represented national interests, negotiated agreements and maintained official relations with other states.

Economic diplomacy emerged within this framework as governments used trade, investment, finance, development assistance and international regulation to advance national prosperity and strategic objectives.

That model remains important. Yet globalisation has changed the geography of economic activity.

Companies select locations according to regional conditions. Research collaborations often connect universities directly across borders. International students choose cities and campuses. Supply chains are built around industrial corridors. Cross-border infrastructure connects neighbouring territories. Tourism, entrepreneurship and talent mobility are shaped by regional identity and quality of place.

As a result, the economic interests of a region cannot always be represented effectively through national-level instruments alone.

A national government may negotiate trade agreements, but a region must help local companies use those agreements. A national investment promotion agency may identify a potential investor, but regional actors must provide sites, workers, utilities, suppliers and permits. A country may promote itself as a destination for international talent, but regions compete directly over where those professionals will live, work and build their careers.

This has produced a multi-level model of international engagement involving:

• national governments;
• regional governments;
• metropolitan areas;
• municipalities;
• development agencies;
• universities;
• business associations;
• research institutions;
• ports, airports and infrastructure operators;
• international networks.

The most effective economic diplomacy is not necessarily centralised. It is coordinated.

The European Committee of the Regions explicitly emphasises the importance of cooperation between European, national, regional and local levels in responding to globalisation. It also operates networks and international partnerships that enable regional and local authorities to exchange practices and engage with partners beyond the European Union.

This is an important institutional development. It recognises that international influence is not produced only through national capitals. It can also emerge from connected regions acting with legitimacy, technical capacity and strategic purpose.

02. What is regional economic diplomacy?

Regional economic diplomacy can be defined as:

The coordinated use of a region’s political, institutional, economic, cultural and knowledge relationships abroad to advance investment, trade, talent, innovation and sustainable development objectives.

This definition contains several important elements.

First, it is economic. It focuses on investment, exports, business partnerships, skills, research, infrastructure, technology and development.

Second, it is diplomatic. It involves relationship-building, representation, trust, negotiation, intelligence and long-term engagement.

Third, it is regional. Its purpose is to strengthen a specific territory and its companies, institutions and communities.

Fourth, it is strategic. It should be guided by priorities rather than by isolated events, symbolic visits or unconnected memoranda of understanding.

Regional economic diplomacy can include: investment attraction, investor aftercare, export promotion, international business missions, university and research partnerships, talent attraction and retention, participation in global networks, cross-border cooperation, development cooperation, international branding, policy advocacy, diaspora engagement, access to international finance, and cooperation with national and multilateral institutions.

These activities are mutually reinforcing. An international university partnership may support talent attraction. A business mission may generate both export leads and investment prospects. A cooperation project may improve institutional capacity and create relationships with future investors. A regional brand may increase visibility among students, entrepreneurs and international companies.

The objective is not simply to become more visible abroad. It is to become more connected, more credible and more capable of converting international relationships into territorial value.

03. Attracting investment through relationships.

Investment attraction is one of the most visible components of regional economic diplomacy.

Foreign investors make decisions under conditions of uncertainty. They often lack detailed knowledge of local markets, regulations, infrastructure, labour availability and supplier capabilities. They therefore rely on trusted intermediaries and credible sources of information.

A regional government or investment promotion agency can reduce this information gap.

The OECD notes that well-designed investment promotion and facilitation policies can reduce information asymmetries and administrative costs, making it easier for companies to establish or expand operations. These policies can also encourage linkages with local companies, skills transfer, technology transfer and investment in less-developed regions.

This is the practical foundation of investment diplomacy.

From promotion to intelligence

A regional investment promotion strategy should begin with intelligence rather than publicity. The region must understand which foreign markets contain companies aligned with its sector priorities, what motivates those companies to internationalise, which locations they are currently comparing, what risks concern them, what assets the region can credibly offer, which gaps could prevent a project from succeeding, and which public and private actors can support the investment.

This requires a targeted approach. A region should not attempt to attract every possible investor. It should identify sectors where its capabilities, infrastructure, talent and business ecosystem create a credible competitive proposition. Potential priorities might include advanced manufacturing, renewable energy and energy technologies, mobility and automotive components, agrifood and biotechnology, digital services, health and life sciences, logistics and maritime industries, circular economy solutions, and creative and cultural industries.

For each priority sector, regional diplomacy should identify target countries, companies, trade associations, research institutions, investors and financial partners.

Diplomacy as a trust-building process

Investment decisions are rarely made during a single meeting. They are developed through repeated contact. The first conversation may introduce the region. The second may explore business needs. A later meeting may involve a site visit, a utility provider, a university, a municipality or a potential supplier.

Trust is accumulated through the quality of information and the reliability of follow-up. Regional actors therefore need to operate as professional diplomatic platforms. They must understand the investor’s business model, speak the language of the relevant sector, provide accurate information, coordinate internally, manage expectations, protect confidentiality, maintain contact over time, and remain involved after the investment decision.

This is particularly important for smaller regions. They may not have the financial scale or global visibility of major metropolitan areas, but they can compete through responsiveness, specialisation and relationship quality.

Investment aftercare as economic diplomacy

The international relationship does not end when the investment is announced. Existing investors are often the most credible ambassadors of a territory. They can expand their operations, recommend the location to suppliers and influence decisions within their corporate networks.

Aftercare should therefore be treated as a diplomatic function. It involves maintaining trust, identifying operational problems, supporting expansion and connecting the company to local institutions. A regional agency should know whether the investor can recruit, whether it has difficulties with permits or utilities, whether it is considering expansion, whether it needs local suppliers, whether it is seeking research partners, and whether corporate decision-makers understand the region’s capabilities.

The quality of aftercare determines whether an initial project remains isolated or becomes the foundation of a wider international business presence.

04. Competing for global talent.

Capital is not the only mobile factor of production. Talent is also choosing between territories.

International professionals, students, researchers, entrepreneurs and specialised technicians evaluate regions according to employment opportunities, income, housing, public services, culture, mobility, safety and social integration. This means that talent attraction is an international policy objective, not merely a human-resources issue.

The OECD’s regional attractiveness framework identifies talent, investment and visitors as interconnected targets. It also highlights the relevance of fast internet, affordable housing, international students, public services, environmental quality and a sense of belonging in attracting and retaining mobile talent.

Regional economic diplomacy can support talent attraction in several ways.

International education partnerships

Universities and higher-education institutions are among the most important channels for developing international talent pipelines. Regional authorities can support partnerships between local institutions and foreign universities, joint degrees, international research programmes, mobility agreements, vocational education cooperation, internship and apprenticeship networks, summer schools, and international entrepreneurship programmes.

These relationships create familiarity with the region before a person enters the labour market. International students who have studied in a territory may later become employees, founders, researchers or business connectors.

Skilled migration and relocation

Regions can also help companies recruit internationally by making relocation easier. This may involve information services for foreign workers, support with administrative procedures, assistance for family relocation, connections to schools and healthcare, language and integration programmes, professional networks, and housing guidance.

A regional talent strategy should be built around the whole experience of relocation. A highly qualified professional may reject an opportunity if the family cannot find suitable accommodation or education.

Diaspora diplomacy

Many regions possess a global diaspora with strong emotional, professional and commercial connections to the territory. Diaspora networks can support investment attraction, international business introductions, export development, mentoring, university collaboration, cultural diplomacy and entrepreneurship.

A diaspora strategy should not focus only on symbolic identity. It should map professional capabilities and create structured opportunities for engagement. Former residents may be particularly valuable because they understand both the territory and the external market. They can function as trusted intermediaries between local institutions and international partners.

Quality of place as an economic asset

Talent diplomacy cannot be separated from regional development policy. International promotion cannot compensate for weak housing, poor transport, limited healthcare or a lack of professional opportunities.

This is why talent attraction should be connected to housing policy, education, public transport, healthcare, digital connectivity, cultural life, environmental quality, employment opportunities for partners, and social inclusion. A region’s international message must be supported by domestic action. Otherwise, talent promotion becomes a promise that the territory cannot fulfil.

05. International cooperation as a development instrument.

International cooperation is often associated with development aid, technical assistance or cultural exchange. At regional level, however, it can also become a practical instrument for economic transformation.

Regions cooperate internationally to access knowledge, develop joint projects, exchange policy solutions, improve administrative capacity, share infrastructure, strengthen innovation, access funding, build resilience, support entrepreneurship and create new markets for local companies.

This is especially relevant where regions face similar challenges. Coastal regions may cooperate on blue economy and climate adaptation. Industrial regions may collaborate on decarbonisation and workforce transition. Rural territories may exchange solutions for demographic decline, agrifood innovation and digital inclusion.

The quality of cooperation matters. A partnership should not be judged by the number of meetings or documents signed. It should be assessed by the capabilities and outcomes it produces. Useful questions include: What problem is the partnership addressing? Which institutions are involved? What resources are committed? What practical outputs will be delivered? How will companies, universities and citizens benefit? What will continue after the project ends?

From symbolic partnerships to strategic portfolios

Many regions have a long list of international agreements that generate limited activity. The challenge is to move from a collection of relationships to a strategic portfolio. A regional internationalisation strategy should classify partnerships according to purpose: investment and business; knowledge and research; talent and education; infrastructure and logistics; institutional learning; climate and sustainability; and cultural and civic diplomacy.

Each partnership should have a responsible institution, a defined objective and measurable indicators. This approach helps avoid a common failure: maintaining international relationships because they are historically important, even when they no longer serve current regional priorities.

Cross-border cooperation

For border regions, economic diplomacy has a particularly practical dimension. The neighbouring territory may contain potential customers, workers, suppliers, research partners and infrastructure. Cross-border cooperation can address transport connections, labour mobility, emergency services, healthcare, environmental management, education, energy, tourism, logistics and industrial supply chains.

The European Union’s institutional framework recognises the importance of cooperation between regional and local authorities, including with neighbouring countries and candidate countries. The European Committee of the Regions also supports working groups, joint consultative committees and networks that facilitate these relationships.

Cross-border diplomacy is therefore not simply about friendship between administrations. It can remove barriers that directly affect competitiveness and quality of life.

06. Regions as strategic partners for international organisations.

Regional economic diplomacy can also position territories closer to national and international organisations.

This requires moving beyond the idea that regions are only policy recipients. Regions are also laboratories, implementers, data providers, partners and sources of innovation. International organisations increasingly need regional-level capacity because many global objectives are delivered territorially — including the Sustainable Development Goals, climate adaptation, energy transition, skills development, migration, health systems, digital transformation, territorial cohesion, inclusive growth, resilience, and sustainable urban and rural development.

The European Union’s cooperation framework with the European Committee of the Regions includes support for decentralised cooperation, cross-border cooperation, local democracy and capacity-building in third countries. It also recognises the importance of strengthening relations with countries that have federal, regionalised or devolved structures.

This institutional direction creates opportunities for regional organisations with strong technical capacity. A region can engage with international institutions through pilot projects, peer-learning networks, policy reviews, international forums, data partnerships, technical assistance, demonstration projects, regional observatories and thematic coalitions.

To be effective, regional actors need to communicate in the language of international policy. They must present projects through concepts such as additionality, scalability, measurable outcomes, governance, impact and transferability. A local programme may be highly relevant internationally if it demonstrates a solution that other territories can adapt.

07. Economic diplomacy and regional branding.

International relations are also shaped by perception. Investors, students, researchers and partners need to recognise a region and understand what it represents. A fragmented or inconsistent external image makes it harder to build credibility.

Regional branding should not be reduced to a logo or slogan. It is the strategic expression of a territory’s identity, capabilities and ambitions. An effective regional brand answers: What is this region known for? Which sectors does it lead or specialise in? What type of talent can grow here? Which global challenges can it help solve? What kind of partners does it seek? What values guide its development? What evidence supports these claims?

The brand must be shared by the institutions that represent the territory internationally. Investment agencies, universities, municipalities, business associations and tourism organisations should not necessarily use identical messages, but their narratives should be compatible.

From destination marketing to relationship marketing

Traditional place promotion often focuses on visibility: websites, events, advertising and participation in international fairs. Economic diplomacy requires a deeper model based on relationship marketing.

The objective is to identify relevant people and institutions, understand their interests, establish trust and maintain engagement over time. This involves stakeholder mapping, relationship databases, regular intelligence updates, sector-specific content, targeted events, diplomatic and institutional briefings, follow-up systems, success stories and executive-level engagement.

A region becomes internationally influential not when everyone has heard of it, but when the right people know why it matters and whom to contact.

08. The role of professional investment promotion agencies.

Regional economic diplomacy requires institutional capacity. An investment promotion agency operating at regional level must combine several professional roles: economic intelligence analyst, investor relationship manager, sector specialist, international partnership coordinator, project facilitator, policy advocate, communications strategist and aftercare manager.

This is broader than traditional promotion. The agency must understand international markets while remaining deeply connected to local capabilities. It must interpret investor needs for regional institutions and translate territorial strengths into a language that international companies understand.

Its work should be organised around a clear operating cycle: identify target sectors and markets; map relevant international actors; build relationships before an investment project appears; develop evidence-based propositions; facilitate site selection and project implementation; support local linkages; retain and expand investors; measure outcomes; and use results to improve the strategy.

The agency should also maintain a close relationship with national investment promotion and diplomatic structures. Regional and national agencies should not compete for visibility or ownership of projects. They should coordinate intelligence, contacts, incentives, institutional responsibilities and aftercare. When national and regional diplomacy are aligned, the investor receives a stronger and more coherent message.

09. Governance and democratic legitimacy.

The rise of regional diplomacy also creates governance challenges. International engagement requires public resources, political accountability and coordination with national foreign-policy objectives. Regions must therefore operate within their legal competences and maintain transparency about the purpose and results of international activity.

Several principles are important. Complementarity: regional diplomacy should complement, not undermine, national foreign policy, through shared objectives, information exchange and institutional coordination. Strategic alignment: international relationships should support the region’s development strategy rather than operate as a separate political activity. Accountability: partnerships, missions and international programmes should have clear objectives, budgets, responsible institutions and public reporting. Inclusiveness: business diplomacy should involve SMEs, universities, civil society, municipalities and citizens, so that internationalisation does not benefit only a small group of large companies or institutions. Long-term continuity: international relationships require time, and excessive dependence on electoral cycles or individual political leaders can weaken credibility.

The democratic legitimacy of regional diplomacy ultimately depends on whether international action produces visible public value.

10. Measuring the impact of regional economic diplomacy.

Regional diplomacy should be evaluated through outcomes rather than activity levels. Counting missions, meetings and memoranda may be useful for internal management, but these indicators do not demonstrate economic impact.

A stronger measurement framework may include:

Investment — qualified foreign-investment leads; projects facilitated; investment capital mobilised; jobs created; high-skilled positions; expansion projects; investor retention; local supplier linkages.

Talent — international students; foreign professionals recruited; retention rates; researchers attracted; entrepreneurs supported; diaspora engagements; family-reintegration outcomes.

Cooperation — joint projects launched; external funding secured; technologies transferred; institutional capacities improved; policy solutions adopted; cross-border barriers reduced.

International visibility — strategic partnerships; international media coverage; participation in high-level networks; invitations to policy forums; recognition by international organisations; quality of international referrals.

The OECD’s work on FDI qualities underlines the importance of connecting investment activity to productivity, innovation, job quality, skills, gender equality and the low-carbon transition. Regional diplomacy should adopt the same principle. The objective is not simply to attract more international activity, but to attract activity that strengthens the region’s long-term resilience and competitiveness.

11. The strategic opportunity for regions.

The rise of regional economic diplomacy is particularly important for territories that may not possess the scale or visibility of national capitals.

A region can compensate for limited size through specialisation, agility, proximity and credibility. It can become internationally relevant by being known for a specific combination of capabilities: a strong industrial cluster; a distinctive research competence; a transition technology; a high-quality talent environment; a strategic geographic position; a proven cooperation model; a resilient and liveable community.

The OECD’s recent work on regional attractiveness argues that regions should map, promote and improve their economic, social and environmental assets in order to attract and retain talent, investment and visitors. It also stresses that internationalisation involves business, human, knowledge and infrastructure connections. This is a useful framework for regional economic diplomacy because it connects international action with territorial development.

The strongest regions will not attempt to imitate national governments. They will develop a distinct diplomatic role based on their own assets and competences, acting as gateways to local and regional ecosystems, partners for foreign investors, conveners of universities and companies, platforms for international talent, laboratories for sustainable development, intermediaries between local needs and global institutions, and trusted partners for cross-border cooperation.

Conclusion: regions are becoming international actors.

The internationalisation of regions is changing the practice of economic diplomacy.

Investment, talent, knowledge, infrastructure and cooperation increasingly move through regional networks. Companies evaluate territories rather than abstract national markets. International organisations need regional partners to implement complex development agendas. Universities, cities and economic agencies are creating relationships that operate across borders with increasing autonomy and sophistication.

Regions are therefore becoming international actors.

Their influence will not depend primarily on the number of foreign visits they organise or the number of partnership agreements they sign. It will depend on whether they can convert international relationships into concrete outcomes: investment that creates quality employment; talent that strengthens innovation; cooperation that improves institutional capacity; partnerships that expand market access; international projects that support sustainable development; visibility that reinforces credibility.

Regional economic diplomacy is not an alternative to national diplomacy. It is its territorial extension and economic complement.

The future belongs to regions that understand this shift and organise themselves accordingly.

They will not wait for the world to discover them.

They will build the relationships, capabilities and institutional presence required to become active participants in the global economy.