Donor Support for Connecting Firms in Asia to Value Chains

Abstract

Globally, trade has become increasingly organized in value chains and is characterized by fragmented production processes: 60 % of trade is in intermediate goods and 85 % is linked to multinational enterprises. Firms in developing countries can specialize in tasks and specific business services to connect to these value chains, offering remarkable opportunities provided that they find their areas of comparative advantage. Aid for trade can help developing economies plug into regional and global production networks. Countries in Asia received disbursements of $86 billion from 2006 to 2012, helping address infrastructure deficits, reduce the thickness of borders, and improve business environments. Firms from Central Asia to the Pacific have taken advantage of these improvements, connecting to manufacturing, information and communications technology, and agri-food value chains. This chapter examines the aid strategies and programs for linking firms in developing Asia to value chains (including through regional approaches), and assesses the trade and development results. This analysis is based on self-assessment from these countries, bilateral and multilateral donors, and the private sector. It is complemented with aid for trade data extracted from the Organisation for Economic Co-operation and Development (OECD) Creditor Reporting System database; findings from evaluations, case studies, and empirical studies; and broader trade and development literature.