Gross value added

Last updated on 5 October 2017

Gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy, in economics. In national accounts GVA is output minus intermediate consumption;[1] it is a balancing item of the national accounts' production account.[2]

Relationship to gross domestic product

GVA is linked as a measurement to gross domestic product (gdp), as both are measures of output. The relationship is defined as:

GVA + taxes on products - subsidies on products = GDP

As the total aggregates of taxes on products and subsidies on products are only available at whole economy level,[3] Gross value added is used for measuring gross regional domestic product and other measures of the output of entities smaller than a whole economy. Restated,

GVA = GDP + subsidies - (direct, sales) taxes

Over-simplistically, GVA is the grand total of all revenues, from final sales and (net) subsidies, which are incomes into businesses. Those incomes are then used to cover expenses (wages & salaries, dividends), savings (profits, depreciation), and (indirect) taxes.

See also

References

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