Asia Pacific's integration to global value chain doubles from 2000

Nepal remains on periphery

 

Kathmandu, May 6

The Asia Pacific region accounted for a third of global value chain trade, with its developing economies doubling their share from 9 per cent to 18 per cent from 2000 to 2023, the Asian Development Bank’s (ADB)'s latest report said.

The Asian Development Policy Report 2026 launched at ADB’s 59th Annual Meeting in Samarkand in Uzbekistan on Wednesday is titled 'Global Value Chains and Inclusive Development'.

It noted that greater specialisation in the stages of global production has helped Asia and the Pacific achieve economic growth, create jobs, and reduce poverty over the past quarter century.

Some economies—particularly in East and Southeast Asia—have become deeply embedded in regional and global production networks, occupying central positions that allow them to capture significant value addition. Others, including many smaller, lower-income, or geographically remote economies, have participated less and remain largely excluded from these networks.

“Greater geoeconomic fragmentation reduces the opportunities for firms to benefit from global value chains (GVC), which risks stifling industrialisation and growth in economies stuck in low-value roles,” said ADB Chief Economist Albert Park. “To bridge the gap, support for less-developed economies is crucial to help them take advantage of emerging technologies, and to strengthen infrastructure, logistics, and the business environment to enhance productivity and competitiveness.”

The report said that the benefits of global value chains remain uneven, mainly benefiting large productive firms, while small and medium enterprises face barriers due to high compliance costs and limited capabilities.

Nepal on the periphery

According to the report, a few economies, including Cambodia, China, South Korea, and Nepal increased both forward and backward participation, with forward participation rising more sharply than backward participation in China.

However, many smaller economies remain marginal participants, highlighting the uneven nature of global value chain integration in the region. Landlocked economies such as Bhutan and Nepal, resource-dependent economies, including the Kyrgyz Republic and Laos, Maldives, and several Pacific Island economies, face constraints from small domestic markets, geographic isolation, and limited industrial capabilities. In 2023, the bottom 10 Asian economies in backward GVC trade together accounted for just 0.86 per cent of total regional backward GVC trade, with a similar share for forward participation.

Nepal also has greater intra-regional share compared to its peers despite being on the periphery of the GVC.

Likewise, the report said that geopolitical tensions, supply chain disruptions, and rapid technological changes are reshaping how economies participate in global value chains.

 

'Resilience should be developed'

The report identifies three policy priorities to support global value chain integration – resilience, environmental sustainability and inclusion. "Strengthening resilience requires coordinated improvements in robust connective infrastructure, the capability of firms to respond flexibly to changing circumstances, and policy frameworks that enable diversification of markets, inputs, and partnerships," read the report.

Likewise, compliance with evolving environmental and sustainability standards is becoming a general requirement across global value chains. Strengthening policies in areas such as standards, certification, and traceability can help firms to adopt cleaner technologies and production processes.

Similarly, achieving inclusive outcomes requires coordinated actions that reduce trade costs through infrastructure investment, open trade policies, and trade facilitation; develop worker skills and firm capabilities; and support access for small and medium-sized enterprises to finance, digital platforms, and export opportunities.

Published in The Rising Nepal daily on 7 May 2026.