ADB: Asia’s Role in Global Value Chains Doubles

Tashkent, Uzbekistan (UzDaily.com) — The share of developing economies in Asia’s global production networks has doubled over the past quarter century, according to a 2026 policy report by the Asian Development Bank (ADB) titled “Global Value Chains and Inclusive Development,” presented at the bank’s 59th Annual Meeting in Samarkand.

The report states that the region now accounts for one-third of global trade conducted through global value chains. The share of developing economies in this system increased from 9% in 2000 to 18% in 2023.

It notes that some economies, particularly in East and Southeast Asia, have become deeply embedded in regional and global production networks, securing central positions that allow them to capture significant value added. Others, including smaller, less developed or geographically remote countries, participate to a far lesser extent and remain largely excluded from these networks.

“Rising geoeconomic fragmentation is reducing opportunities for firms to benefit from global value chains, threatening to slow industrialization and economic growth in economies stuck in low-income positions,” said ADB Chief Economist Albert Park, stressing the need to support less developed economies in adopting new technologies and strengthening infrastructure, logistics and business environments.

While specialization in narrow segments of production has enabled rapid integration into global markets, the benefits of global value chains remain uneven and are concentrated among large, highly productive firms. Small and medium-sized enterprises face barriers linked to compliance costs and limited capabilities.

Geopolitical tensions, supply chain disruptions and rapid technological change are reshaping how economies participate in global value chains. The report identifies three policy priorities to support integration into global production networks.

Resilience is becoming an increasingly important element of competitiveness. Heightened uncertainty and fragmentation have increased the importance of reliability, adaptability and risk management. Strengthening resilience requires coordinated improvements in reliable connectivity infrastructure, firms’ ability to adjust to changing conditions, and policy frameworks that support diversification of markets, resources and partnerships.

Environmental sustainability is also becoming a defining factor for participation in global value chains. Compliance with evolving environmental and sustainability standards is increasingly a baseline requirement. Stronger policies in areas such as standards, certification and traceability can help firms adopt cleaner technologies and production processes.

Inclusiveness remains a central objective at all stages of integration. Achieving inclusive outcomes requires coordinated efforts to reduce trade costs through infrastructure investment, open trade policies and trade facilitation, workforce skills development, and improved access for SMEs to finance, digital platforms and export opportunities.

Between 2000 and 2023, income inequality within developing Asia-Pacific economies, measured by a population-weighted Gini coefficient, increased by 6.7 percentage points.

The report notes that this rise was driven mainly by a small number of highly populous economies, while most countries saw declining inequality. It also finds limited evidence that participation in global value chains had a significant effect on overall income inequality in the region.

More productive firms, particularly those linked to multinational corporations or advanced technologies, capture a disproportionate share of gains. These firms are better able to meet international standards, access financing and expand capabilities.

Domestic small firms are often confined to low-value activities with limited upgrading potential. Data from developing Asia-Pacific economies show that small enterprises are 25% less likely to participate in global value chains than larger firms.

Workers face similar disparities. Those employed in higher value-added activities, which often require higher skills and education, tend to earn higher wages, enjoy more stable employment and have greater career advancement opportunities.

In contrast, workers in labor-intensive, low-skill segments—many of them women or informally employed—generally experience lower wages, weaker job security and limited access to skills development.

The report’s analysis of 2000–2023 data shows that a 10% increase in participation in global value chains is associated with a 0.45% rise in per capita income, contributing to sustained macroeconomic growth.

During the same period, developing Asia-Pacific economies recorded strong per capita income growth, averaging more than 5% annually on a weighted basis.

This helped many economies in the region significantly narrow the income gap with advanced economies, with per capita income in developing Asia rising from about 13% to 26% of developed economy levels, while also supporting large-scale poverty reduction.

Multinational corporations play a central role in organizing production networks, setting standards and controlling market access. They account for about one-third of global GDP and two-thirds of global exports. In Asia-Pacific, their share of value added varies widely—from over 35% in Hong Kong to less than 5% in Bangladesh and Pakistan.

The ADB is a leading multilateral development bank supporting sustainable, inclusive and resilient growth in the Asia-Pacific region. Working with members and partners to address complex challenges, it uses innovative financial instruments and strategic partnerships to improve lives, build quality infrastructure and protect the planet. Founded in 1966, the ADB is owned by 69 members, 50 of which are from the region.