Decomposition of value added in Bangladesh’s gross exports to India: a bilateral and sectoral perspective

Abstract The trade partnership between Bangladesh and India has strengthened significantly over the past decade, with growing integration into global value chains (GVCs). This study explores the value-added components of Bangladesh’s exports to India from 2012 to 2022, categorizing them into five groups: domestic value added (DVA) directly absorbed, re-exported DVA, DVA returning home, foreign value added (FVA), and double-counted trade. Using the global value chain framework and input–output analysis, the research employs multiregional input–output (MRIO) tables from the Asian Development Bank, covering 62 economies and 35 sectors. This methodological approach provides a detailed examination of sectoral and bilateral trade dynamics, highlighting the shifts in value-added contributions over the decade. The results reveal an increasing trend of backward participation in GVCs for Bangladesh, particularly in the textile sector, where the contribution to India’s GVC participation rose by 182%. Other sectors, including agriculture, food and beverages, leather, and telecommunications, also exhibited notable trends. The agriculture sector saw a modest rise in value-added exports of final (4%) and intermediate (3%) goods, while the food and beverage sector experienced a 56% increase in intermediate exports despite a decline in final goods. The textile sector achieved a 15% growth in intermediate exports and a 13% increase in FVA. These findings underscore the need for sectoral diversification and an enhanced focus on intermediate goods to strengthen Bangladesh’s trade position. By providing a decade-long, sector-specific analysis, this study offers valuable insights for policymakers and stakeholders aiming to optimize GVC integration.