Soft Power - An Economic Strategy

Soft Power - An Economic Strategy

Objective:

Learners analyze the concept of soft power as a modern instrument of foreign trade policy and understand how cultural appeal is systematically used to increase national exports and global influence.

Contents and methods:

Using a factual text and a fictional eyewitness account, the differences between hard and soft power as well as mechanisms such as nation branding, public diplomacy, and the halo effect are explored. The methodological implementation involves text analysis, the reconstruction of chains of effects, research in the “Global Soft Power Index,” and a concluding critical assessment of state cultural control.

Competencies:

  • Technical competence: Distinguishing and explaining international power categories (hard vs. soft power)
  • Analytical competence: Investigation of the economic impact of cultural exports (e.g., K-pop) on gross domestic product
  • Judgment competence: Critical reflection on the opportunities and dangers of state influence on culture and national identity
  • Media and research competence: Dealing with global comparative studies to measure the intangible assets of nations

Target group:

Grade 10 and above

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Target group and level

Grade 10 and above

Subjects

PoliticsEconomics

Soft Power - An Economic Strategy

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Introduction

In a globalized world, power is no longer exercised solely through tanks or sanctions, but increasingly through the power of attraction. This worksheet introduces you to the concept of ‘soft power’ and uses an example to show you how culture can become a strategic economic factor.

The evolution of power: From military strength to cultural appeal

In modern foreign economic theory, the understanding of state influence has changed fundamentally. While classical approaches primarily relied on so-called hard power—i.e., the exercise of power through military force or economic sanctions to compel actors to behave in a certain way—US political scientist Joseph Nye established a complementary concept. He argues that sustainable influence in global competition is increasingly generated through soft power. This refers to a state's ability to achieve its goals through attractiveness and persuasion. This “soft power” is fueled by cultural appeal, political values, and a credible foreign policy that motivates citizens of other nations to voluntarily support its own objectives.

In this context, strategic instruments such as public diplomacy are becoming increasingly important. This refers to the targeted cultivation of a state's relations with the public in other countries in order to create a positive climate of opinion through exchange programs or media relations. This goes hand in hand with nation branding, in which a country is managed like a brand. The aim is to position the national identity in such a favorable light that it appeals to investors, tourists, and consumers worldwide. A strong image acts as an intangible asset: it boosts exports and increases diplomatic bargaining power. If a country succeeds in presenting its own culture—through music, film, or technological innovations, for example—as desirable, this creates a pull effect that strengthens political alliances without the need for costly threats.

📝Can you think of an example of a country's “soft power”?

📌 Learn more about a specific example of a country's use of “soft power.” Read the report by a fictional contemporary witness and complete the following tasks.

Park Ji-won

Park Ji-won

My name is Park Ji-won, and as a former undersecretary in the Ministry of Culture, Sports, and Tourism, I have spent decades weaving the threads of a strategy that is now regarded worldwide as a paragon of national foresight. When you see the stock prices of automotive giants like Hyundai rise as the K-pop group BTS announces a new world tour, it might seem like a strange coincidence. But what does the choreography of a pop group truly have to do with the sales statistics of a mid-size sedan? The answer lies in a coolly calculated political vision, born out of sheer necessity more than 25 years ago. The genesis of this vision was a report presented to our presidential advisory council that forever changed our perspective. A single Hollywood blockbuster, Steven Spielberg's 'Jurassic Park,' was generating as much revenue as the export of 1.5 million Hyundai cars. For us, this was a wake-up call. We realized that our traditional heavy industry was too vulnerable to crises and that we needed a new form of influence. We had to move away from relying solely on Hard Power—the exercise of influence through military force or economic sanctions—and towards what political scientist Joseph Nye defined as Soft Power. The strategy was clear: we would leverage cultural attractiveness to create a positive national image that would serve as a gateway for all our other economic sectors. The objective was nothing less than a complete reconstruction of our national identity abroad. To achieve this goal, we initiated unprecedented political measures, with the state acting as both an investor and an architect. In 2001, we founded the Korea Creative Content Agency (KOCCA), a state-run body with an annual budget of several hundred million euros. KOCCA does far more than traditional funding: it provides direct subsidies for the international expansion of music labels, covers the costs of global PR campaigns, and makes state-of-the-art studios available. A key infrastructure project was the construction of 'K-Pop Clusters'—entire districts, such as in Goyang, designed specifically for content production and fan tourism. Furthermore, we used targeted legal amendments as a strategic lever. The most prominent example is the 2020 'BTS Law,' an amendment to the Military Service Act that allows outstanding pop artists to defer their mandatory service until the age of 30, ensuring their global market power is not jeopardized. To flank this strategy, we built a global diplomatic infrastructure: over 30 Korean Cultural Centers worldwide now offer free language courses and fan events, acting as outposts for our public diplomacy and forging deep emotional bonds between local populations and Korean culture. But how does this mechanism function economically? Here, we harness the so-called halo effect. When consumers worldwide form an emotional connection to a group like BTS, an unconscious sympathy for everything South Korean emerges. This cultural radiance acts as a psychological lubricant: the barrier to purchasing a Korean smartphone or car is massively lowered because the country is already positively associated in people's minds with 'high quality' and 'cool.' However, this strategic success is inextricably linked to the socio-economic fabric of our nation. The state’s promotion of the culture industry corresponds with a societal climate of extreme pressure that begins in the education system. For the artists, being classified as a national export good often means years of contractually rigid training where the individual is subordinated to the demands of the market and state representation. Moreover, this economic focus means that cultural productions are now increasingly vetted for global mass appeal and efficiency before they receive state support, which can come at a cost to artistic diversity.

📝Name the “soft power” in the example and note whether and to what extent it plays a role in your own everyday life.

The halo effect

📝Put the sections in the correct order.

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Note for the teacher

To access all of the data in the Global Soft Power Index, you need to create an account. Without registering, you can view some of the information and data on the site, but not all of it.

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Global Soft Power Index

The Global Soft Power Index is a comprehensive annual study by the consulting firm Brand Finance that measures and compares the “soft power” of over 190 nations worldwide. To collect data, over 170,000 people in more than 100 markets are surveyed to assess the perception of a country in categories such as culture, foreign policy, economy, and national values. It serves as an important analytical tool for governments to objectively measure the success of their nation branding and international influence beyond military strength.

Learn more about the latest results by completing the following tasks.

Use the official Global Soft Power Index website to do so. You can find it here.

📝 Soft power: strategic stroke of genius or cultural manipulation? – Assess whether the targeted control of culture by the state should be seen more as an opportunity for national self-assertion in global competition or as a threat to the authenticity and freedom of society.