This study presents the first comprehensive key sector analysis for Nepal, using an integrated approach of linkage analysis and hypothetical extraction method with the 2022 input–output table. The empirical analysis identifies three strategically crucial sectors. Agriculture emerges as the economy’s foundation, demonstrating the highest impact on both output and value-added generation, reflecting its fundamental role in employment and GDP contribution. Wholesale Trade exhibits balanced demand–supply effects through market integration, while Financial Intermediation shows strong supply-side influence through credit intermediation services. Moreover, Construction and the Electricity, Gas, and Water Supply sectors play vital supporting roles, enhancing infrastructure development and leveraging extensive hydropower resources to boost growth potential. The analysis reveals interesting disparities between output and income generation across sectors, particularly in the Food, Beverages, and Tobacco sector. These empirical findings align with and provide evidence-based support for recent government initiatives. While acknowledging methodological limitations regarding employment and environmental data, this research establishes an evidence-based framework for strategic sector prioritization and offers policy recommendations for sustainable economic development.

Provides tools for decomposing Global Value Chain (GVC) participation and value-added trade. It implements the frameworks proposed by Borin and Mancini (2023) 10.1080/09535314.2022.2153221> for source-based and sink-based decompositions, and by Borin, Mancini, and Taglioni (2025) 10.1093/wber/lhaf017> for tripartite and output-based GVC measures.

South Asia’s construction sector faces the dual challenge of sustaining growth while addressing environmental sustainability. Despite its economic significance, integrated analyses of the sector's structural dynamics and regional trade dependencies remain limited. This study fills this gap by conducting a regionally integrated structural decomposition analysis (SDA) of the construction sector across six South Asian countries (Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka) from 2012–2022. Using the Asian Development Bank's multiregional input–output tables, this paper examines how final demand, technological change, and source-specific import substitution (China, India, Rest of the World) drive shifts in output, value added, and CO₂ emissions. Key findings highlight structural vulnerabilities: final demand dominates growth, yet expansion is constrained by rising import dependence—particularly on inputs from China and India—which limits domestic value creation and heightens supply chain risks. Technological progress stagnates or declines in most countries, reflecting inefficiencies in production. Environmentally, construction activity correlates with rising CO₂ emissions (e.g., in Bhutan, Maldives, Bangladesh) due to carbon-intensive practices. A frequent decoupling of output growth from proportional value-added gains underscores a structurally fragile growth model vulnerable to external shocks. This study advances SDA methodology by disaggregating import substitution to reflect South Asia's trade dynamics, offering policymakers insights to address systemic constraints. Recommendations emphasize technological upgrading, resilient domestic supply chains, and low-carbon policies aligned with SDGs 9 and 11. By disentangling source-specific dependencies and environmental-economic trade-offs, this paper provides actionable strategies for sustainable construction sector growth in the region.