Glossary of terms
You are here:
areppim > Glossary of terms >
- Value added
- Value added corresponds to:
- gross output of all producers,
- value of intermediate goods and services consumed during the production process.
- Gross value added does not include:
- fixed assets depreciation,
- costs of depletion and damaging of natural resources - these costs are said to be "externalised", in other terms pushed to the wider society.
- Net value added equals Gross added value less consumption of fixed capital that corresponds to depreciation in the general literature.
- Value added to an economy is equivalent to its GDP (gross domestic product) in whatever way it is considered, as both are measuring the same flows of money:
- Product viewpoint: value of all goods and services produced, plus taxes and less subsidies.
- Consumption viewpoint: value of final consumption by households, government and industry, plus exports and less imports.
- Income viewpoint: value of wages, other compensation to employees, taxes on production and on imports, less subsidies and gross operating surplus (profit).