Geopolitical tensions, supply chain disruptions, and rapid technological advancements are transforming how economies engage in global value chains, as highlighted by the Asian Development Bank (ADB). The ADB’s ‘Asian Development Policy Report 2026’ underscores that Asia and the Pacific have leveraged greater specialization in global production stages to drive economic growth, job creation, and poverty reduction over the past 25 years. The report reveals that the region contributes a significant one-third share to global value chain trade, with its developing economies doubling their participation from 9% to 18% between 2000 and 2023.
ADB’s Chief Economist Albert Park emphasized that increased geoeconomic fragmentation poses challenges for firms seeking to benefit from global value chains, potentially hindering industrialization and growth in economies confined to low-value roles. To address this disparity, Park stressed the importance of supporting less-developed economies in capitalizing on emerging technologies and enhancing infrastructure, logistics, and the business environment to boost productivity and competitiveness.
Some economies in East and Southeast Asia have deeply integrated into regional and global production networks, securing pivotal positions that enable them to capture substantial value addition. Conversely, smaller, lower-income, or geographically isolated economies have experienced limited participation and exclusion from these networks. While specialization in specific production segments has facilitated swift integration into global markets, the advantages of global value chains are disproportionately enjoyed by large productive firms, with small and medium-sized enterprises encountering obstacles like high compliance costs and limited capacities, according to the report.
The report outlines three key policy priorities to foster global value chain integration. Firstly, resilience is increasingly vital for competitiveness, necessitating enhancements in connective infrastructure, firms’ adaptability to changing conditions, and policy frameworks that promote market diversification, input flexibility, and partnership expansion. Secondly, environmental sustainability is emerging as a critical factor influencing participation in global value chains, with evolving environmental standards becoming a universal requirement. Strengthening policies related to standards, certification, and traceability can facilitate the adoption of cleaner technologies and production processes by firms. Lastly, inclusion remains a fundamental goal throughout integration stages, requiring concerted efforts to reduce trade costs through infrastructure investments, open trade policies, and trade facilitation, enhance worker skills and firm capabilities, and facilitate small and medium-sized enterprises’ access to finance, digital platforms, and export opportunities.
