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Asian Development Policy Report 2026: Global Value Chains and Inclusive Development

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Session Overview

The session, moderated by Sharanjit Leyl, centers on the Asian Development Policy Report 2026, which argues that global value chains (GVCs) have driven growth and poverty reduction in Asia. However, the benefits are uneven, and geopolitical, technological, and climate pressures are reshaping which countries and groups can participate.

Main Arguments and Key Points

  • GVCs remain central to development, but inclusiveness is not automatic. The report’s lead author, Neil Foster McGregor, notes that GVCs have been growth- and poverty-reducing for developing Asia. Yet benefits vary within and between countries. Policy therefore must address who captures value, not just who participates.

Uneven Outcomes Across Economies and Groups

  • Some economies remain peripheral to GVCs, while others integrate but remain stuck in low-tech / low-value-added activities.
  • Even when countries upgrade, smaller firms, lower-skilled workers, and women often capture fewer benefits.
  • While aggregate data may show weak links between participation/upgrading and inequality, distributional gaps emerge at a finer level (e.g., firm size, sector, gender roles).

Participation and Upgrading: Growth Benefits, Upgrading Challenges

  • GVC participation is associated with stronger growth, even after controlling for other factors.
  • Upgrading—moving into higher value, more complex, and more upstream roles—is difficult, and only a limited set of economies manage it (examples cited include China, Malaysia, and Indonesia).
  • Economies stuck at the periphery or limited to assembly tend to capture less value and perform worse.

A Changing GVC Environment Narrows Pathways

The report highlights four major forces:

  1. Geopolitical fragmentation: more trade uncertainty, but also more space for regional networks
  2. Digitalization: new entry opportunities for small firms, though regulations and infrastructure can constrain them
  3. Sustainability / green compliance requirements: stricter standards can raise barriers, while compliant firms may gain profitability
  4. Industrial policy and shifting government priorities: influence where value chains develop

Policy Prescription: Coordinated, Inclusive Upgrading

The report calls for coordinated action across four policy areas:

  • Trade policy (market access, attracting FDI)
  • Trade facilitation (help firms meet regulatory and standards requirements)
  • Connectivity (transport + digital infrastructure)
  • Domestic capabilities (skills and institutions supporting broad inclusion)

It also emphasizes that policy should be tailored to starting conditions:

  • Edge economies need support to enter GVCs (lower trade costs, basic firm capabilities)
  • Low-tech assemblers need assistance to upgrade and meet standards
  • Frontier economies must manage standards and automation to maintain competitiveness that is compatible with jobs and inclusion

Discussion Highlights from the Panel

  • Inclusion requires proactive policy and system design

    • Albert Park (ADB): Inclusive GVC environments are harder due to fragmentation and uneven technology impacts, but countries can’t “step away from globalization.” They must pursue opportunities aligned with capabilities.
    • Shang-Jin Wei (Columbia University): GVC participation is a necessary condition for growth, but may worsen inequality because large firms and well-positioned regions capture more. Policy should strengthen smaller firms/less advantaged regions and address redistribution.
    • Daria Taglioni (World Bank): Standards and traceability create fixed compliance costs that exclude smaller actors. She recommends reducing exclusion without weakening standards—for example, collective compliance tools (shared labs/testing, mobile support, subsidies) and data/platform governance so producers capture value rather than only large platform companies.

  • Uzbekistan as a case of leveraging corridors, digital exports, and reforms

    • Ilhom Narkulov (Uzbekistan) explains how Uzbekistan mitigates disruptions through regional cooperation and corridor investment (notably the “Middle Corridor”), reporting major increases in freight and cross-border economic activity.
    • He also frames Uzbekistan’s approach around digital connectivity, AI/digital exports, energy/electricity linkages, and tourism as part of broader value chains, along with future corridor projects (including rail and cross-border connectivity).
    • Opportunities noted include:
      • Moving toward higher value exports (upgrading from basic commodities)
      • Expanding agriculture tied to standards and compliance
      • Using regional free trade/economic zones designed to be more inclusive

  • Digitalization as both opportunity and risk

    • The panel referenced Shein (as described as a digital technology platform) to illustrate how digital tools can connect small producers to global markets faster and sustain income opportunities for smaller firms and women.
    • At the same time, bargaining power and social outcomes may require public intervention.

“Single Priority” Takeaways (End of Session)

  • Albert Park: Close the digital divide—expand digital access and platform availability.
  • Shang-Jin Wei: Embrace, train, and redistribute (access + capability building + sharing gains).
  • Daria Taglioni: Think systemically and act at the points where exclusion occurs.

Presenters / Contributors

  • Sharanjit Leyl — Moderator; host
  • Neil Foster McGregor — Lead author, ADPR 2026
  • Albert Park — Chief Economist, ADB
  • Shang-Jin Wei — Professor, Columbia University
  • Daria Taglioni — Research Manager, World Bank
  • Ilhom Narkulov — Alternate Governor, Asian Development Bank; Ministry of Economy and Finance, Government of Uzbekistan

Original video