Example: the national costume of Malaysia for men is the Baju Melayu. The current Malaysian Prime Minister is Muhyiddin Yassin. Googling for images of him, we find lots of photos of him in a suit and tie, but comparatively few of him in a Baju Melayu. Why? It seems especially appropriate for him to do so at venues where he is representing the country, e.g. at international meetings, but no - usually every male leader at these meetings wears suits and ties. Female leaders wear more varied clothing, but still nobody wears their country's traditional costume.
Why should they? What advantage do they gain from wearing some traditional costume? Wearing traditional costumes has some implications:
- What is an appropriate "traditional costume" for a country? Is the bavarian leather pants representative for Germany? Surely not. Wearing the traditional costume of your region may be considered inappropriate or even offensive in other regions of the same country. A suit is neutral
- It is often only a cliche. If people do not wear these kind of clothing in everyday life, why wear it on international meetings?
- Other countries do not do it, especially not the rich western countries. Why single yourself out with clothing? It immediately creates a visual difference between "the rich westerners" and "the others"
National costumes represent old traditions
In most countries the "national costume" is essentially historical reenactment which represents the way these people dressed in, for example, 18th century. It is not a reflection of how the people dressed before or after that, in general, you will have very, very different "traditional dress" in different ages and centuries. And, more importantly, in many cases (though not all) it's not a reflection of how people of that nation dress now and it would be unusual for any person to wear it outside of specific events that are about old traditions.
Furthermore, many "national costumes" (of which I'm aware of, mostly around Europe - perhaps e.g. Asia is very different) reflect a traditional peasant attire - often focusing on the wealthier segment of farmers, but not something that a politician or nobleman would have ever worn in history.
Most leaders want to strike a balance - on one hand, establishing their distinct national sovereignty and the fine cultural traditions they come from, and how the legitimacy of their rule stretches back many generations; on the other, that they're modern, up-to-date and of course if you visit or trade with us you won't feel alienated or suffer unexpected troubles due to our unfamiliar culture.
Needless to say, a lot of this depends on how people dress in your home country right now - on cultural inertia. The Pope wearing the traditional outfit is completely normal, but if the Irish Taoiseach attended meetings in a St Patrick's Day outfit, that would seem less traditional and more bizarre.
International diplomacy tends to focus on commonalities, not differences.
When world leaders meet at international events, the goal is typically to come to some agreement. Highlighting the differences between two nations does nothing to further that end, and only reinforces the notion that the nations are unlike one another. Strong diplomatic ties are often formed between nations that are like one another historically or ideologically or politically, while starkly different nations may not get along as well.
Entering a meeting where you hope to find common ground with another person while wearing something that screams "we are not the same" does not engender a spirit of working together. Traditional costumes may have their place at events that seek to highlight diversity or world cultures, but they won't help world leaders come to terms on economic, human rights, or climate issues, and may actually act as a detriment.
The question you should ask yourself is what would a Western European or North American leader be wearing at a time when national dress would be appropriate. The answer is probably military uniform (in the small number of cases that would be appropriate), or black tie ( aka the Tuxedo), or more likely white tie (i.e. a white bow tie and a tail coat) for men, or a similarly formal evening gown for a woman.
You'll note that there are similarly few photos of such leaders dressed like that as well. The majority of photos of heads of government are when they are at business, in business attire. That doesn't necessarily mean a lounge suit, but doesn't mean the kind of national dress you seem to be thinking of, which are mostly highly formalized versions of the traditional clothes of rural workers.
It is somewhat popular in diplomacy. Ex:
Then again, most national costumes are pretty much impractical for office-bound work of any kind. They simply evolved for other purposes.
In a national context, they can express (using small regional differences) a preference between national fractions (there are always some). A national leader is not expected to do that.
In international context, it is like not speaking lingua franca - you can still do your job, but you are suboptimal at best.
Some national costumes is inappropriate to wear daily (for example i have access to one such, a swedish one but it was only used at marriage by the man.)
Other ones is i would say entirely appropriate for example this one: Lekatts Karin i Söndagsdräkt ie Sunday church dress