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Gross value added

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Title: Gross value added  
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Gross value added

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;[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

  1. ^ http://epp.eurostat.ec.europa.eu/statistics_explained/Glossary:Value_added
  2. ^ http://epp.eurostat.ec.europa.eu/statistics_explained/Glossary:Production_account
  3. ^ "Guide to Gross Value Added (GVA)".  
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