Gross value added

In economics, gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy. "Gross value added is the value of output minus the value of intermediate consumption; it is a measure of the contribution to GDP made by an individual producer, industry or sector; gross value added is the source from which the primary incomes of the System of National Accounts (SNA) are generated and is therefore carried forward into the primary distribution of income account." GVA is an important measure, because it is used to determine gross domestic product (GDP). GDP is an indicator of the health of a national economy and economic growth. It represents the monetary value of all products and services produced in the country within a defined period of time. "In comparing GVA and GDP, we can say that GVA is a better measure for the economic welfare of the population, because it includes all primary incomes. From the point of view of the society as a whole GDP, despite its disadvantages, is probably a better measure for economic growth and welfare, because it includes also NET INDIRECT TAX (indirect taxes minus subsidies) which are the financial basis for the collective consumption of the society." The relationship between GVA and GDP is defined as: GVA= GDP + subsidies on products – taxes on products 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. Restated, GDP at factor cost = gross value added (GVA) at factor cost. GDP at factor cost = value of the final goods and services produced within the domestic territory of a country during one year by all production units inclusive of depreciation. GDP at market price = GDP at factor cost + net indirect taxes(indirect taxes- subsidies). GVA at factor cost = value of output (quantity * price) - value of intermediary consumption.

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