gva

Gross value added (GVA) is a monetary measure of the value created by producers in an economy during a specific period. It represents the difference between the value of output and the intermediate goods and services used to produce that output. GVA is typically reported at basic prices, meaning it excludes taxes and subsidies on products.

Calculation and scope: GVA can be calculated as gross output minus intermediate consumption. It can be measured for individual sectors, industries, regions, or the economy as a whole. In practice, GVA is reported in current prices and can be adjusted to constant prices to show volume growth over time.

Relationship to GDP: GVA is a core component of GDP in many accounting frameworks. GDP at market prices equals GVA at basic prices plus taxes on products minus subsidies on products. Equivalently, GVA plus net taxes on products yields GDP at market prices.

Components: The value added in GVA arises from compensation of employees, gross operating surplus, and gross mixed income generated by production. GVA captures the production side of the economy, distinct from intermediate consumption, taxes, and subsidies on products.

Uses and limitations: GVA is widely used to assess the performance of sectors, regions, and the economy, and to construct GDP from the production side. It supports comparisons of productivity and living standards. Limitations include differences in statistical methods across countries, reliance on price and volume measurements, and the exclusion of taxes and subsidies on products from the base measure, which can affect comparability.