Facilitating Backward Global Value Chain Participation in South Asia: The Role of the South Asian Free Trade Agreement

Batool Bushra and Hiroyuki Taguchi ()
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Batool Bushra: Strategic Research Center, Saitama University, Saitama 338-8570, Japan
Hiroyuki Taguchi: Strategic Research Center, Saitama University, Saitama 338-8570, Japan

Economies, 2025, vol. 13, issue 10, 1-16

Abstract: This study examines the impact of the South Asian Free Trade Agreement (SAFTA) on participation in global value chains (GVCs) among South Asian economies, specifically Bangladesh, India, and Pakistan. This research offers new empirical insights into the relatively underexplored relationship between SAFTA and GVCs in the region. The findings indicate that SAFTA has promoted backward GVC participation by increasing the foreign value-added content of exports, particularly from India to Bangladesh and Pakistan, and from Pakistan to Bangladesh. These results suggest untapped potential for expanding regional GVC linkages, as many bilateral GVC connections within South Asia remain underdeveloped.

Keywords: backward GVC participation; global value chain; South Asian free trade agreement; structural gravity trade model (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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