Global value chains (GVCs) have long been the dominant paradigm for organizing production and trade, yet recent geopolitical tensions have accelerated a shift toward regional value chains (RVCs). Adopting a data‑driven approach, this study examines the participation of Iran and a set of countries with economic‑trade agreements in both GVCs and RVCs over the period 1995–2017, and assesses the role of such participation in enhancing their industrial performance. Using input‑output tables and the gross export decomposition framework into value‑added components, we compute various participation indices. Our findings indicate that, although the regionalization of value‑chain linkages has shown an increasing trend, its overall level remains below that of highly integrated regions. Sectoral analysis for Iran reveals that the country’s integration follows a commodity‑driven pattern, with the mining and extraction sector exhibiting weaker regional value‑chain embeddedness compared to other sectors. Employing an ARDL approach, we estimate both short‑run and long‑run effects of value‑chain participation on “competitive industrial performance”. The results confirm a positive and significant long‑term impact of participation on industrial outcomes. Notably, the effect of upstream (forward) participation is stronger than that of downstream (backward) participation, while the contribution of RVC integration is lower than that of GVC integration. These findings suggest that industrial policy should be value‑chain‑oriented rather than focused solely on import substitution or export promotion. We recommend prioritizing improvements in the quality of regional and global production integration—particularly through strengthening upstream linkages with industrialised economies—and incorporating these strategies within a long‑term policy horizon.