South Asian global value chain integration patterns: A value-added perspective

Abstract

This study analyzes the integration of South Asia into global value chains (GVCs) through a value-added decomposition framework that distinguishes simple and complex participation modes. Using the Asian Development Bank Multi-Regional Input-Output database, which spans two decades, the study examines sectoral and country-level GVC participation, bilateral value-added flows, and global integration patterns. The findings demonstrate a persistent structural asymmetry where backward participation substantially exceeds forward participation across all economies. Sectoral analysis indicates that labor-intensive sectors demonstrate forward participation, and capital-intensive industries show stronger backward orientation. The bilateral examination uncovers distinct integration spheres: India dominates Nepal and Bhutan’s production networks through simple GVC linkages, while China increasingly supplies intermediate inputs to Bangladesh and Pakistan. Despite growing intermediate goods trade replacing final goods imports, complex GVC integration remains limited throughout the region. By moving beyond gross trade metrics, this study offers country-specific insights into structural dependencies and identifies key impediments—tariff regimes, infrastructure gaps, and regional fragmentation—that constrain upgrading and value capture, informing strategies for more inclusive GVC integration in South Asia.