Abstract
Small states are particularly challenged within the prevailing multipolar and multifocal world order. To avoid being overpowered economically and politically in this rapidly changing context, small states increasingly seek shelter in multilateral frameworks and/or clusters around regional unions. Additionally, at a national level, they increase international cooperation, where economic diplomacy plays a key role. Focusing on Luxembourg, the European Union’s wealthiest member state, this paper adopts a structural realist perspective to understand why the country pursues economic diplomacy. Applying the realist approach and extending the economic diplomacy Okano-Heijmans framework, this paper contributes to the conceptualization of economic diplomacy and posits that Luxembourg’s economic diplomacy serves not only economic welfare but also political objectives for strengthening the country’s positioning and soft power.