Can Global Value Chains Effectively Serve Regional Economic Development in Asia?

Regional economic integration through logistics, information network, and connectivity improvements can increase the “virtual” size of an economy as trade with neighboring countries increases. This leads to substantial benefits from scale, network, coordination, and agglomeration economies. As has been shown, especially in small economies and less developed countries (LDCs), regional economic integration induces the necessary rebalancing needed for integration of the regional portions of global value chains (GVCs) into the global portions of GVCs. This paper uses South Asian case studies in GVC development and related mapping methodology to demonstrate this effect. The methodology traces a product through an entire channel across a region: from the point of product conception to the point of consumption. As shown in this paper, an appropriate set of investment and policy measures undertaken across a region can lead to a substantially rebalanced way of income growth