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The Potential of Participation in Global Value Chains
Low demand, high trade costs, poor infrastructure, unstable law and order and the lackadaisical nature of government impede the economic growth of the North Eastern Region. This prolonged underdevelopment points to the urgent need of the NER to integrate with the global economy for faster economic growth. Such an integration and subsequent economic transformation can be made possible through participation in global value chains. The NER has comparative trade advantage in producing labour-intensive products, and participation in services-based GVCs, particularly tourism, can be very profitable for the NER.
The author is grateful to an anonymous reviewer for comments and to Ch Priyoranjan for beneficial discussions.
The North Eastern Region (NER) of India comprises eight states, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, with a total landmass of 2,62,500 square kilometres, accounting for 7.7% of the country’s area, with a population of around 3.8% of India’s total (Srivastav 2010). Ninety–eight percent of its boundary is bordered by India’s foreign neighbours, Nepal, Bhutan, China, Myanmar, and Bangladesh. The regional economy has been witnessing a low level of economic growth. The net state domestic product (NSDP) increased from 6.8% in 2005 to 7.8% in 2013 and the average per capita NSDP increased from 25,142 in 2005 to 42,806 in 2013 (Table 1).
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