Gross value added
Encyclopedia
Gross Value Added is a measure in economics
of the value of goods
and services produced in an area, industry or sector of an economy
. In national accounts GVA is output minus intermediate consumption
; it is a balancing item of the national accounts' production account.
(GDP), as both are measures of output
. The relationship is defined as:
As the total aggregates of taxes on products and subsidies on products are only available at whole economy level, Gross Value Added is used for measuring Gross regional domestic product
and other measures of the output of entities smaller than a whole economy.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
of the value of goods
Good (economics and accounting)
In economics, a good is something that is intended to satisfy some wants or needs of a consumer and thus has economic utility. It is normally used in the plural form—goods—to denote tangible commodities such as products and materials....
and services produced in an area, industry or sector of an economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
. In national accounts GVA is output minus intermediate consumption
Intermediate consumption
Intermediate consumption is an economic concept used in national accounts, such as the United Nations System of National Accounts , the US National Income and Product Accounts and the European System of Accounts .Conceptually, the aggregate "intermediate consumption" is equal to the amount of the...
; it is a balancing item of the national accounts' production account.
Relationship to Gross Domestic Product
GVA is linked as a measurement to Gross Domestic ProductGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP), as both are measures of output
Output (economics)
Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country," whether consumed or used for further production.The concept of national output is absolutely essential in the field of macroeconomics...
. The relationship is defined as:
- GVA + taxTaxTo tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es on products - subsidiesSubsidyA subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...
on products = GDP
As the total aggregates of taxes on products and subsidies on products are only available at whole economy level, Gross Value Added is used for measuring Gross regional domestic product
Gross regional domestic product
Gross Regional Domestic Product or Gross Domestic Product of Region is a subnational gross domestic product for measuring the size of that region's economy. It "is the aggregate of gross value added of all resident producer units in the region...
and other measures of the output of entities smaller than a whole economy.
See also
- National accountsNational accountsNational accounts or national account systems are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry accounting...
- Measures of national income and outputMeasures of national income and outputA variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product , gross national product , and net national income . All are specially concerned with counting the total amount of goods and...
- Gross domestic productGross domestic productGross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
- Gross regional domestic productGross regional domestic productGross Regional Domestic Product or Gross Domestic Product of Region is a subnational gross domestic product for measuring the size of that region's economy. It "is the aggregate of gross value added of all resident producer units in the region...
- Value addedValue addedIn economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
- Gross profitGross profitIn accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments...