Gross Value Added (GVA) 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.
GVA is linked as a measurement to Gross Domestic Product (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.
In 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 (of materials and services). Value Added is a higher portion of Revenue for integrated companies, e.g., manufacturing companies, and a lower portion of Revenue for less integrated companies, e.g., retail companies. Total value added is very closely approximated by Total Labor Expense (including wages, salaries, and benefits) plus "Cash" Operating Profit (defined as Operating Profit plus Depreciation Expense, i.e., Operating Profit before Depreciation). The first component (Total Labor Expense) is a return to labor and the second component (Operating Profit before Depreciation) is a return to capital (including capital goods, land, and other property). In national accounts used in macroeconomics, it refers to the contribution of the factors of production, i.e., land, labour, and capital goods, to raising the value of a product and corresponds to the incomes received by the owners of these factors. The national value added is shared between capital and labor (as the factors of production), and this sharing gives rise to issues of distribution.
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