Value chain analysis is defined as “analysis of a series of interlinked exchanges through which a commodity and its constituents pass from extraction through production to end use”. It is an explanatory tool that has its origins in the study of global trade relations and impacts of globalization, and has been extensively used to analyze commodities markets. This approach emphasizes not only the actors involved in the trade, but also describes the structure of the market and traces the distribution of benefits along the chain as determined by various interests and power relations.
Global & Regional value chains have emerged an alternative approach to advance economic performance with regional networking in production and trade. This approach could be an efficient vehicle to achieve high and sustained economic growth at the national, sub-regional and regional level through a process of regional integration. This study mainly focuses on analyzing tea sector value chain in Sri Lanka with special emphasis on regional trade and production networks in South Asia. Further the nature and role of multinational corporations (MNC) in the specific value chain with the support of domestic firms in production and value addition will be examined. More importantly, the implications of regional value chains (RVC) for domestic firms in terms of improving production efficiency, acquiring technology and finally moving up in the value adding activities with vertical and horizontal integration will be looked at comprehensively.