Gross value added

The gross value added (English: gross value added, in short: BWS) is a measure of the income approach the national accounts. It results from the total value of goods and services produced in the production process (production value ), less the value of intermediate consumption.

• 3.1 General formula
• 3.2 Example

History

Historically, the term " value-added " changed a lot over time. The Physiocrats only agriculture was adding value. The only class that was able to create value, the productive class (farmers and tenants ). The sterile class (craftsmen and trade ), however, did not manage new values ​​, but walked to this. That is, the value of the sterile class covered only their own needs, so did nothing to the national product.

In classical economics (especially Adam Smith, David Ricardo ) is in accordance with labor theory of value human labor, with Karl Marx labor power to create value. Income side, the value allocated to the income from labor, capital and land.

The current understanding of the gross value added is determined by the National Accounts (English: " System of National Accounts ", simply: SNA ) as the extensive production term which includes all goods and services produced domestically. Since 1993, the 3rd edition of the SNA is present in the European version of ESA 1995 (European System of Accounts ), and forms the current basis for calculating economic indicators.

Review of gross value added

Theoretically, there are three different ways to assess the gross value added, namely at factor cost to basic prices and at market prices.

Review at factor cost

Gross value added at factor cost is derived from the gross value added at market prices less production taxes and plus subsidies. Thus, the gross value added at factor cost free of taxes on production (especially of excise) or subsidies.

The sum of all factor income ( in business, government, private household ) as profits, wages / salaries, interest, rent and leases, net value added form. The gross value represents the net value plus depreciation and amortization.

Review at basic prices

" The basic price is the amount that the producer per unit of goods and services by the buyer produced by him is replaced without the production or sale to paying taxes ( ie taxes on products ) plus any subsidy receivable sold to the produced or be granted to goods ( ie subsidies on products ). "

The valuation at basic prices avoids the associated with the indirect taxes and subsidies, and related to the produced and treated goods and services distortion of the gross value added. The transition to the calculation of gross value added at basic prices eliminates the need to calculate this at factor cost. This is the default method that is used on corporate and industry levels.

Marking to market

Gross value added at market prices resulting from the gross value added at basic prices plus taxes and less subsidies on products.

Gross value added in the national accounts

The gross value added in the production approach of National Accounts (SNA ) corresponds to the services provided in individual sectors of the economy benefits.

Since the revision of the national accounts 2005, the goods and services of all sectors of the economy produced are no longer valued at market prices, but at basic prices. Thus, the influence of the state is removed on the prices of the assessment.

For the non - market producers (state, non-profit organizations), the gross value added is the sum of the individual expense items, such as compensation of employees, depreciation and amortization.

The gross value added of banks and insurance companies take into account not only sales of services, commissions and fees also FISIM as interest rates and insurance premiums are not considered as sales of services.

General formula

To calculate the gross value added of each industry, from the gross production value of the sector or industry that are provided for production inputs must be deducted:

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The gross value of production (or production value) is the sum of all produced or manufactured goods and services of a business entity ( company, state or private households) or an economy. From the Company and of the entire economy point of view, the gross output value of all used production factors ( factor services ) that were needed for production.

The gross production value is determined in the national accounts at basic prices. For the non - market producers of the gross production value is calculated over the cost, which happens in the market producer on your sales. Gross production value as a measure is only suitable because it contains inputs for the assessment of the economic performance of a sector or an economy. To avoid this, the gross output minus intermediate consumption values ​​are considered.

The inputs are (English: intermediate consumption ) all purchased from entities other and converted in the process of production or manufacture and service that are necessary for their own performance. Thus, the inputs are not considered as separate products. But you increase throughout the entire production process the value of the final product. Some examples of the inputs are both raw materials and supplies, intermediate and semi-finished products as well as repair costs of other companies, interest on bank loans, commissions, rent and lease. Within the framework of the national accounts intermediate consumption is valued at purchasers' prices.

In the production accounts are the inputs to the so-called expense items whose size depends on the type of business entity, that is, whether it is a production account of a company, the state or a private household. Since the inputs in the company are higher than that in the state and even in private homes. The production account of a company, or State budget is as follows:

As a result, initially results in the unadjusted gross value added, in which the FISIM is still included. This consists of the charges for banking services. You are asked to ensure that the value creative activity of credit institutions can be demonstrated in relation to other economic agents. After deducting FISIM from the unadjusted gross value added is obtained adjusted gross value added.

Example

The calculation of gross value added clarified by the following example.

The manufacture and sale of orange juice takes place on three levels:

At every stage of production results in a value that corresponds to the conversion of this stage. So,

So corresponds to the production (output ) of a company at the same time for intermediate consumption in the chain of the following company. The oranges supplied by the farmer are counted for the beverage factory as inputs, because they serve as raw material for the production of orange juice. The production value of the beverage factory in turn is the input for the sale at the supermarket.

Gross value added or GDP is € 170 000 and corresponds to the value of the final stage sales.

Gross value added of the world

Gross value added is a measure for assessing the economic performance of a business entity that is a company, a state, a private household, but also a sector, region or province.

Gross value added at current prices amounted to almost 51 784 worldwide billion U.S. dollars in 2007. This was a pitch of about 11.75% over the previous year. The six terms of performance six largest economies - United States with 13,799 billion, Japan with 4,535 billion, China with 3,242 billion, Germany 2.973 billion, 2.563 billion UK and France with 2.280 billion U.S. dollars - reach U.S. together 29 391 billion dollars. This corresponds to a share in the world gross value added of 56.8 %, with the U.S. reached about 26.6 %.

The gross value added of the world in the field of agriculture, forestry, fisheries at current prices in 2007 was at 2.030 billion U.S. dollars. This corresponds to 3.92% share in the world gross value added. The largest contribution was made by countries such as China with 380 billion U.S. dollars, India with 189 billion U.S. dollars, the United States with 146 billion U.S. dollars, Brazil with 72 billion U.S. dollars, Japan with 67 billion U.S. dollars ..

Due to the expansion of the internal market in the European Union took the agricultural gross value added in the last 26 years more than in the U.S. or Japan. Between 1970 and 1986, the agricultural gross value added in Europe increased by 4.5 times between 1986 and 1996 and by 1.2 times. These results, however, were influenced by the accession of new countries to the EU.

The growth of gross value added in a developed industrial sector is much more pronounced than the growth of agricultural production. Compared to the previous year, growth in 2007 was 13.4 %. The industrial gross value added of the world at current prices amounted to almost 9,224 billion U.S. dollars, representing approximately 17.8 % of the total world gross value added in 2007.

The states with the highest industrial gross value added are USA with 1,831. Billion U.S. dollars, China with 1.106 billion U.S. dollars, Japan accounts alone 41.8% of the industrial world gross value added with 926 billion U.S. dollars at current prices - what.

Also in the mining industry in 2007 are USA, China, Japan, Germany and the UK at the top with correspondingly 2,357 billion, 1.411 billion, 1.036 billion, 747 billion and 444 billion U.S. dollars ( in current prices). The gross value added of the world amounted to 12,316 billion U.S. dollars.

In construction, U.S. was 22.9 % of the world's gross value added in the construction sector at 661 billion U.S. dollars.

The finance, insurance, social and other services activities in the world at current prices in 2007 amounted to almost 45.4 % of the world's gross value added, which corresponds to 23,510 billion U.S. dollars. Of these, 7,725 were billions of U.S. dollars to the United States.

Gross value added per capita and per person employed

Gross value added per capita is one of the ways to compare the productivity of different regions or economies. However, in this comparison, the different characteristics of regional labor markets, such as the participation rate, the proportion of people or part-time work will not be considered.

The gross value added alone as a measure of economic performance is not suitable, since the volume of economic output depends on the size of the country and the number of inhabitants. The highest does not automatically mean the most productive volume. The largest share in the world gross value added part of the United States. According to figures from a number of international organizations, countries such as Luxembourg and Bermuda achieve the highest GVA per head. However, in the case of Luxembourg, these figures are regularly much too high because they do not consider in relation to the total population of the country enormous number of 145,000 commuters from the three neighboring countries that contribute to value creation in the country, in the calculation of gross value added per capita. The economy of Luxembourg is still one of the most successful of the EU, due to the highly developed financial sector.

Gross value added per employee is referred to as labor productivity. So:

The development of the number of employees in industry and the service sector depends, for example, very much on the previous period. If the gross value added and real wages in the previous period increase significantly, then the employment rises in the industry and in the service sector also. The employment increases but only in the short to medium term. However, long term employment falls back to the initial level.

Gross value added and its importance

Gross value added is one of the most important indicators in the economic statistics that are created on the basis of national accounts. This metric provides a basis for the major macroeconomic indicators, such as gross domestic product.

The gross value says nothing about the value of a thing, only about their price. The main factors here is not whether something useful has been created, but whether it is traded, and the price at which it is traded. In addition, not the production draws the values ​​, but the trade.

Gross value added increases with the number of redistributions in the product chain, from production of raw materials to the realization of the final product. Therefore, conduct thorough processing of agricultural raw materials and the diversification of production to an increase in gross value added and the final product price.

An important factor for the growth of value added is a strong effective demand for goods or services that have priority in all economic and political situations.

New market opportunities for growth are connected in business with the use of modern means of communication. The rapid growth of the value is also closely linked to the investment attractiveness of the industrial sector.

The data from the national accounts are used for example to determine the degree of development, the wealth and welfare of the country. The gross value added and net value added data, provide the basis for determining the level of productivity and productivity dynamics in a sector.

Link between GVA and GDP

The sum of the gross value added of sectors minus some adjustment items below provided bank charges plus taxes and less subsidies on products is defined as the gross domestic product.

The gross value added shows the importance of the economic sectors and thus represents an important parameter for politics, business and science is that analyzes the economic development of all economic units.

Criticisms

The proposed method for calculating the gross value added has a number of disadvantages. Especially the following negative aspects are:

• In the proposed scheme of the calculation are the so-called " holding gains " is not taken into account. This can distort the true value of production inputs in the long-term storage of finished products and raw materials because of the raw material price increases.

• In national accounts, only marketable goods and services are recognized. A lower reporting of economic performance leads to inaccuracy of the determination of GDP and prosperity of an economy. This is possible because of the black market, underground economy, subsistence agriculture or the provision of social services without compensation ( neighbor help, housework). Thus, this uncertainty may result when comparing the overall economic performance of the economies to the falsification of the actual results.
• In addition, the importance of non- designated items varies. What is the assessment of the performance of an economy of meaning, for example, when comparing the developed and developing countries.

• Also, price level changes play an important role in the evaluation of gross value added. Although this change GDP, but not the value itself