International Quarterly of Foreign Relations

International Quarterly of Foreign Relations

Strategic Innovation as an Imperative for an Adaptive Foreign Policy in the Context of a Complex Geoeconomic System

Document Type : Original Article

Author
Mohammad Reza Faraji
Assistant Professor of International Relations, Department of Political Science, Faculty of Humanities and Social Sciences, Ardakan University, Ardakan, Iran
10.22034/fr.2026.480591.1583
Abstract
One of the fundamental issues in the complex international environment is the economic strategies of actors within the complex geoeconomic system. In the complex geoeconomic system, actors’ strategies are shaped by the environment and economic conditions, and the variable of power plays a significant role in this process. Therefore, geoeconomics, as the geostrategic utilization of economic power, is one of the key features of the strategic behavior of actors—particularly economic poles—within the complex international system. The study, based on the assumption of complexity in the international system and the dominance of ambiguity and uncertainty in actors’ strategic environments, attempt to respond to the strategic requirement of foreign policy of actors in a complex geoeconomic system? The findings of the research, with a descriptive-analytical approach and a qualitative method, suggest that in an environment of international uncertainty, strategic innovation, with a view to the ecosystem and the changing environmental context and conditions, is a requirement for the strategies of actors in a complex geoeconomic system, and this innovation is designed according to the capabilities and capacities of actors in the complex geoeconomic system and includes innovation in production, services, processes, and systems. In general, the causal variable of strategic innovation is environmental uncertainty.

Extended Abstract
Introduction
In principle, an innovative phenomenon is something that is considered both new and valuable. over time, Our perceptions of innovation and the idea of innovation have changed greatly. Innovation is not a new phenomenon and is probably as old as humanity itself. Social innovation is based on social needs rather than technology. In the current complex system, actions can be taken strategically and systemically that align with the actors interests under current conditions. In other words, innovation is a necessity and imperative for complex adaptive systems. Based on this, the research seeks to explain the requirements and conditions of economic strategies within a complex geo-economic system. The research question is: What imperatives does the complex geo-economic system impose upon international actors in formulating economic strategies? In response to this question, and considering the premise of the increasing complexity of the international system and the adherence of all systemic elements to the logic of complexity, and postulating the sovereignty of Complex Adaptive Systems (CAS) over international phenomena, it is hypothesized that actors in the complex geo-economic system formulate their strategies based on the principles and foundations of this system. Furthermore, considering the regional ecosystem and the model of Resilience or Panarchy, Innovation is imposed as a fundamental principle upon the strategies of these actors within the complex geo-economic system. Depending on the dominant technology of the system, an actor’s systemic position within the economic structure and regional framework dictates that this innovation must encompass innovation in production, in services, in process, and in the system itself.
The term geo-economics was coined by Edward Luttwak in 1990, which refers to the changes in the nature of power and the increasing importance of economic variables alongside political and military-security variables in the international system. The collapse of the Eastern Bloc and the conclusion of the Cold War catalyzed the development of Democratic Peace Theory and fostered international cooperation. Consequently, contemporary International Relations has established the conditions for a revival of Realist principles, which involves the analysis of ‘what is’ over ‘what ought to be. Geo-economics has emerged within this context, predicated on the transformation of power concepts. Geo-economics is hereby posited as an analytical framework emphasizing how the competition for relative power guides actor behavior within the international system. Therefore, similar to geopolitics, geo-economics is fundamentally predicated on Realist assumptions, particularly the existence of a competitive and conflictual environment in international relations. Nevertheless, the fragility of Liberal concepts is only one of the causes contributing to the resurgence of geo-economics. Another significant factor in recent decades has been the modern and notable ascent of China. Here, geo-economics refers to the strategic application of economic tools to realize geostrategic objectives or to leverage economic power for geostrategic advantage.
In this complex environment, geo-economic scholars analyze the application of geo-economic power as an additional tool within the geostrategic toolkit, employed alongside traditional geopolitical instruments. These authors situate geo-economics close to geopolitics, emphasizing the shift in strategic instruments from military to economic means, and noting the absence of overt violence. Given the underlying assumption of environmental uncertainty and the presence of power diversity within the complex international system, Complex Geo-economics has emerged both as an explanatory framework and as a domain of strategic action focused on economic power. Furthermore, considering the inherently complex and turbulent international environment characterized by pervasive unknowns, strategic innovation is proposed as its most crucial mechanism for responding to potential environmental threats. Thus, Complex Geo-economics builds upon the principles of classical geo-economics while integrating them with geopolitical axioms and drawing upon the logic of complex systems. To ensure the persistence of actors in this complex milieu, it adds the dimension of strategic innovation, a hallmark of non-linear complex environments. In this manner, creativity and innovation become the two pivotal wings of Complex Geo-economics, upon which the survival and advancement of actors in the complex international system fundamentally depend. For instance, Luttwak addressed the role of capital in modern diplomacy, equating capital with the firepower of weaponry. It is noteworthy here that significant distinctions exist between Complex and Classical Geo-economics; overlooking these differences renders geo-economic strategies ineffective in the complex international environment. Classically, geo-economics reduced the economy to the level of instruments used, situated within geopolitical problems. In contrast, Complex Geo-economics, assuming various dimensions of power in international politics, posits the maintenance and elevation of the economic standing of actors within the international system as a primary foreign policy objective. Consequently, Complex Geo-economics adopts a broader concept of geo-economics, viewing it as both a foreign policy strategy and an analytical framework, centering on states as key actors in international relations and foreign policy. Another differentiation lies in problem explanation: classical thinkers fundamentally adopt a linear approach, whereas scholars of complexity engage with issues through a non-linear lens. Accordingly, classical geo-economic scholars posit a temporal distinction between geopolitics and geo-economics, viewing them as successive stages of geostrategy. With a linear perspective, they believe that geopolitical rules have been supplanted by geo-economic rules. Their simplistic understanding of the shift from geopolitical to geo-economic instruments implies not only the cessation of military interventions but also the end of political pressures or alliances, an aspiration not found in contemporary international relations. Contemporary thinkers, conversely, assert that geo-economics does not replace geopolitics, and these two domains are not entirely antithetical in their historical evolution or spatial/geographical application. Furthermore, unlike its classical counterpart, Complex Geo-economics incorporates political and non-economic tools. This concept broadens the scope of Complex Geo-economics to include the utilization of all non-violent political instruments, such as political pressure, conditionality, and intervention. Based on this, Complex Geo-economics can be regarded either as the geopolitical ramifications of economic phenomena or as the consequences of economic trends on geopolitics and national power.
Generally, in the complex international system, geo-economics is presented as a domain of foreign policy action for actors, alongside other issues. All these environments, despite their distinctions, are interconnected and critically tied to the survival of actors in the competitive international arena. It is worth noting that the evolution from hard military issues to economic and cultural ones has not led to a transformation in the anarchic nature of the system; rather, it has complicated anarchy, leaving actors facing a complex anarchic environment whose defining characteristic is competition. Complex Geo-economics adopts a networked-relational perspective on issues and believes that states design geo-economic policies that simultaneously advance multiple interests—military, security, economic, etc. Accordingly, it can be stated that economic and political objectives are intertwined within the concept of Complex Geo-economics. Furthermore, Complex Geo-economics, as a domain of action, refers to the employment of a state’s economic and political tools with the aim of achieving desired geopolitical and economic goals. Therefore, the change in methods from military and political to economic has in no way reduced the imbalance of power; rather, the methods of power projection have simply changed.
The terminology of Panarchy was coined due to a lack of theoretical mastery regarding the hierarchical nature of Complex Adaptive Systems (CAS), alongside the interdisciplinary nature and dynamics of the underlying theory.
The goal of Panarchy is to facilitate the understanding of the source and role of change in complex adaptive systems. Therefore, it strives to explain both the evolution of the system and its internal and external interactions. Fundamentally, Panarchy represents a framework of natural laws that points to the creative role of nature in affairs and views the role of humans as an external, destructive agent.
In the context of a Complex Geo-economic system, Panarchy describes four basic phases: Exploitation, Conservation, Release, and Reorganization.
v The Exploitation phase is one of rapid development, occurring when an actor finds itself in a favorable and suitable position for growth.
v The Conservation phase is one where emphasis is placed on the slow accumulation and storage of materials and energy; in other words, it is when a dominant regime becomes prominent.
v Release happens rapidly when the initial influence declines due to the presence of a competitor, changing conditions, or creative destruction.
v The Reorganization phase is established after Release, creating new regimes through a process.
Separate from these four fundamental phases, three systemic issues are raised: Potential, Connectivity, and Resilience. These have a fundamental impact on the strategies of actors in the complex geo-economic system. Considering two key concepts from spatial economics and technological history, the idea of relationality on one hand, and Path Dependence on the other, are beneficial. The Ecosystem Model demonstrates how one can act around phenomena in the absence of complete knowledge.
Keywords
complex
strategy
ecosystem
geoeconomics
innovation
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