Copyright 1998, the Brookings Institution Press. New communication and information technologies are establishing new organizational capabilities and strategic imperatives for multinational business enterprises. In terms of trade, knowledge diplo- macy will largely supplant industrial diplomacy, whose agenda has largely been realized, and will provide the agenda for international trade policy cooperation well into the next century. Knowledge diplomacy is being conducted with participation from nearly all the world's states. But states' interests and goals differ widely because of variations in level of wealth, economic structure, technological capabil- ity, governmental form, and cultural tradition.
Universality thus compli- cates the negotiation of international economic agreements.
A Changing World Political Economy Industrial diplomacy was conducted during the cold war between the Soviet Union and its communist bloc and the United States with its allied industrialized democracies. The Soviet Union established the Council of Mutual Economic Assistance for barter-based trade within the communist political economy, and economic relations with the West were limited. In the 1980s the economies of the CMEA crumbled, leading to the delegitimization of their economic strategies and the breakup of the Soviet bloc political economy. Meanwhile, decolonization during the 1960s and 1970s had led to man- ifold increases in the number of sovereign states. Asserting their interests, the poor countries of the third world declared a New International Economic Order in the UN General Assembly and UN Conference on Trade and Develop- ment, establishing commodity cartels and calling for more favorable terms of trade.