Gross value added
The gross value added (English: gross value added , abbreviated: GVA ) is an economic key figure in the generation account of the national accounts . It results from the total value of the goods and services generated in the production process ( production value) minus the value of intermediate consumption .
history
Historically, the term “added value” has changed a lot over time. For the Physiocrats , only agriculture added value. The only class capable of creating value was the productive class (farmers and tenants). The sterile class (craftsmen and trade), on the other hand, did not create new values, but transformed them. That is, the added value of the sterile class only covered its own needs, so it did not contribute anything to the national product.
In classical economics (especially Adam Smith , David Ricardo ), according to labor theory of value , human labor, in Karl Marx labor , create value. On the income side, the added value is distributed among the income from labor, capital and land.
The current understanding of gross value added is defined by the national accounts ( “System of National Accounts” , SNA for short) as a comprehensive production term that includes all goods and services produced domestically. The third edition of the SNA has been available since 1993, in the European version ESVG 1995 ( European System of National Accounts ), and forms the current basis for calculating economic indicators.
Evaluation of the gross value added
Theoretically, there are three different ways of evaluating gross value added, namely at factor cost, at basic price and at market price.
Evaluation at factor costs
Gross value added at factor cost results from gross value added at market prices minus production taxes and plus subsidies . Thus, gross value added at factor cost is free from production taxes (especially consumption taxes) or subsidies.
The sum of all factor incomes (in the company, state, private household) such as profits, wages / salaries, interest, rent and leases make up the net value added. The gross value added corresponds to the net value added plus depreciation.
Valuation at basic prices
“The production price is the amount that the producer receives from the buyer per unit of the goods and services he produces, excluding the taxes to be paid on the goods produced or sold (i.e. excluding taxes on goods), plus all subsidies received on the goods produced or sold Goods are granted (including subsidies on goods). "
Valuation at basic prices avoids the gross value added distortion associated with indirect taxes and subsidies and related to the goods and services produced and treated. With the transition to the calculation of gross value added at basic prices, there is no need to calculate this at factor costs. This is the standard method that is used at company or branch level.
Valuation at market prices
The gross value added at market prices results from the gross value added at basic prices plus taxes on goods and less subsidies on goods.
| Gross value added at production costs | |
|---|---|
| + | control other goods |
| - | other goods subsidies |
| = | Gross value added at market prices |
Gross value added in the national accounts
The gross value added in the generation account of the national accounts corresponds to the services provided in the individual economic sectors.
Since the revision of the national accounts in 2005, the goods and services produced in all economic sectors are no longer valued at market prices, but at basic prices. This removes the influence of the state on prices from the valuation.
In the case of non-market producers (government, non-profit organizations ), the gross value added is the sum of the individual expense items , for example employee compensation and depreciation .
In addition to the sales of services, commissions and fees, the gross value added of the credit institutions and insurance companies also takes into account an imputed bank fee, since the interest and insurance premiums are not regarded as sales of services.
General formula
In order to calculate the gross value added of the individual economic sectors, the intermediate consumption made for production must be deducted from the gross production value of the respective sector or branch:
.
The gross production value (or production value ) is the sum of all goods and services produced or manufactured by an economic entity (company, state or private households) or an economy. From the point of view of the company and the economy as a whole, the gross production value consists of all the production factors used (factor services) that were required for production.
The gross production value is determined in the national accounts at basic prices. In the case of non-market producers, the gross production value is calculated via the costs , whereas in the case of market producers it is calculated via their sales. Gross production value as a key figure is only suitable to a limited extent for assessing the economic performance of a sector or an economy, as it contains intermediate consumption. To avoid this, the gross production values minus intermediate consumption are considered.
The inputs are ( English intermediate consumption ) all of the other economic agents related and in the production process converted or processed goods and services that are necessary for their own performance. This means that advance payments are not taken into account as independent products. However, they increase the value of the end product over the course of the entire production process. Some examples of intermediate consumption are raw materials, consumables and supplies, intermediate and semi-finished products, as well as repair costs from other companies, interest on bank loans, commissions, rents and leases. In the context of the national accounts, intermediate consumption is to be valued at purchase price.
In the production accounts, the intermediate consumption belongs to the so-called expense items, the size of which depends on the type of business entity, i. H. whether it is a production account of a company, the state or a private household. Because the intermediate consumption of companies is higher than that of the state and even of private households. The production account of a company, state or household looks like this:
| effort | Yield | ||
|---|---|---|---|
| Advance payments | € 42 | Production value | € 142 |
| Gross value added | 100 € | ||
| total | € 142 | total | € 142 |
The result is the unadjusted gross value added, in which the assumed bank fee is still included. This consists of the fees for the banking services. They are subordinated so that the value-added activity of the credit institutions can be proven to other economic entities. After deducting the imputed bank fee from the unadjusted gross value added, you get adjusted gross value added.
| Production values at production costs of the economic sectors in Germany | |
|---|---|
| - | Advance payments |
| = | Gross value added at basic prices (unadjusted) |
| - | Imputed fees for banking services |
| = | Gross value added at basic prices (adjusted) |
example
The calculation of gross value added is illustrated by the following example.
The orange juice is produced and sold in three stages:
- The farmer "produces" and sells oranges to the beverage factory.
- The oranges are processed into orange juice in the beverage factory and sold to the supermarket.
- The supermarket sells the orange juice to the end consumer.
At every stage of production there is added value that corresponds to the turnover of this stage. So,
- Farmer with a turnover of € 60,000
- Beverage factory with sales of € 100,000
- Supermarket with a turnover of € 170,000
So the production (production value) of a company corresponds at the same time to the intermediate consumption of the company following in the chain. The oranges delivered by the farmer are counted as intermediate consumption for the beverage factory, as they serve as raw material for the production of the orange juice. The production value of the beverage factory is in turn the input for the sale in the supermarket.
| Actor | Gross production value | - advance payments | balance |
|---|---|---|---|
| farmer | € 60,000 | - € 0 | = € 60,000 |
| Beverage factory | € 100,000 | - € 60,000 | = € 40,000 |
| Supermarket | € 170,000 | - € 100,000 | = € 70,000 |
| Total gross value added | = € 170,000 |
The gross value added or the GDP is € 170,000 and corresponds to the value of the turnover of the last stage.
Gross value added in the world
Gross value added is a measure for assessing the economic performance of an economic entity, i.e. H. of a company, a state, a private household, but also an industry, a region or a federal state.
The gross value added in current prices worldwide in 2007 was just under 51,784 billion US dollars. That was an increase of around 11.75% compared to the previous year. The six largest economies in terms of output - USA with 13,799 billion, Japan with 4,535 billion, the People's Republic of China with 3,242 billion, Germany 2,973 billion, UK 2,563 billion and France with 2,280 billion US dollars - together reach 29,391 billion. U.S. dollar. This corresponds to a share of the world gross value added of 56.8%, with the USA reaching around 26.6%.
The world's gross value added in agriculture, forestry and fisheries at current prices was US $ 2,030 billion in 2007. This corresponds to a 3.92% share of the world's gross value added. The largest contributions were made by countries such as China with US $ 380 billion, India with US $ 189 billion, the United States with US $ 146 billion, Brazil with US $ 72 billion and Japan with US $ 67 billion. Dollar.
Due to the expansion of the internal market , gross agricultural value added in the European Union has increased more rapidly in the last 26 years than in the USA or Japan. Between 1970 and 1986 the gross agricultural value added in Europe increased by 4.5 times and between 1986 and 1996 by 1.2 times. However, these results were influenced by the accession of new countries to the EU.
In a developed industrial sector, growth in gross value added is much more pronounced than growth in agricultural production. Compared to the previous year, growth in 2007 was 13.4%. The world's industrial gross value added at current prices was nearly $ 9,224 billion in 2007, which is about 17.8% of total world gross value added.
The states with the highest industrial gross value added are the USA with 1,831. Billion US dollars, China with 1.106 billion US dollars, Japan with 926 billion US dollars in current prices - which alone accounts for 41.8% of the world's industrial gross value added.
Also in mining in 2007, the USA, China, Japan, Germany and the UK are at the top with 2,357 billion, 1,411 billion, 1,036 billion, 747 billion and 444 billion US dollars, respectively (in current prices). The world's gross value added was $ 12,316 billion.
In construction, the USA accounted for 22.9% of world gross value added in the construction industry at 661 billion US dollars.
The world's financial, insurance, social and other service activities in current prices were nearly 45.4% of world gross value added in 2007, equivalent to $ 23,510 billion. Of this, $ 7,725 billion went to the United States.
Gross value added per capita and per employed person
Gross value added per capita is one of the ways to compare the productivity of the various regions or economies. However, this comparison does not take into account the different peculiarities of the regional labor markets , such as the employment rate , the proportion of people or part-time work .
Gross value added alone as a measure of economic output 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. Most of the world's gross value added belongs to the United States. According to figures from a number of international organizations, countries such as Luxembourg and Bermuda have the highest gross value added per capita. In the case of Luxembourg, however, these figures are regularly significantly too high, as they do not take into account the enormous number of 145,000 commuters from the three neighboring countries who contribute to value added in the country in relation to the total population of the country when calculating gross value added per capita. The Luxembourg economy is still one of the most successful in the EU, due to the highly developed financial sector.
The gross value added per employed person is known as labor productivity. So:
The development of the number of employees in industry and the service sector, for example, depends very much on the previous period. If gross value added and real wages increase significantly in the previous period, then employment in industry and the service sector also increases. However, employment will only increase in the short to medium term. In the long term, however, employment will fall back to its original level.
Gross value added and its importance
Gross value added is one of the most important indicators in the economic statistics that are compiled on the basis of the national accounts. This key figure forms the basis for the most important macroeconomic indicators, such as B. for the gross domestic product .
Gross value added says nothing about the value of a thing, only about its price. The decisive factor here is not whether something useful was created, but whether it is traded and the price at which it is traded. In addition, it is not production that creates values, but trade.
Gross value added increases with the number of redistributions in the product chain, from the production of the raw materials to the realization of the end product. Therefore, thorough processing of agricultural raw materials and diversification of production lead to an increase in gross value added and the price of end products.
An important factor for the growth of added value is a strong effective demand for goods or services, which have priority in all economic and political situations.
In the economy, new opportunities for added value are associated with the use of modern means of communication. The rapid growth in value creation is also closely linked to the attractiveness of the industrial sector for investments .
National accounts data are used, for example, to determine the degree of development, wealth and welfare of countries. The gross value added as well as the net value added data form an essential basis for determining the productivity level and productivity dynamics of an economic sector.
Relationship between GVA and GDP
The sum of the gross value added of the sectors minus some adjustment items for imputed bank charges plus taxes on goods and minus subsidies on goods is defined as gross domestic product.
The gross value added shows the importance of the economic sectors and thus represents an important parameter for politics, economy and science, which analyzes the economic development of all economic units.
| Production value (manufacturing costs, PW ) | |
| - | Intermediate payments (without imported VL ) |
| - | Imports |
| = | Gross value added (unadjusted) |
| - | imputed bank fee |
| = | Gross value added (adjusted) |
| + | Taxes on goods ( ) |
| - | Subsidies on products ( Z ) |
| = | Gross domestic product (GDP) |
| + | Balance of primary income with the rest of the world |
| = | Gross National Income |
| - | Depreciation |
| = | Net national income (primary income) |
| - | Production and import taxes to the state treasury |
| + | Subsidies from the state treasury |
| = | National income |
Criticisms
The proposed method of calculating gross value added has a number of disadvantages. Above all, the following negative aspects should be mentioned:
- In the proposed regulation of the calculation, the so-called "holding gains" are not taken into account. These can falsify the true value of production and intermediate consumption in the case of longer storage of finished products and raw materials because of the raw material price increases.
- Only goods and services in line with the market are recorded in national accounts. A lower reporting of the economic output leads to inaccuracy in the determination of the GDP and the prosperity of an economy. This is possible because of the black market, shadow economy, subsistence economy or the provision of social services without consideration (neighbor help, housework). Thus, this inaccuracy in comparing the aggregate performance of the economies can distort actual results.
- In addition, the importance of the items not shown varies. What is important for assessing the performance of an economy, for example when comparing industrialized and developing countries.
- Changes in price levels also play an important role in evaluating gross value added. These change the GDP, but not the added value itself.
literature
- Bernhard Felderer: Macroeconomics and new macroeconomics , 9th edition, Springer Verlag, Berlin 2005, ISBN 3-540-25020-4
- Reiner Clement and Wiltrut Terlau: Fundamentals of applied macroeconomics , Vahlen Verlag, Munich, 1998, ISBN 3-8006-2274-2
- Dieter Brümmerhoff : National Accounts , 8th edition, Oldenbourg Verlag, Munich, 2007, ISBN 978-3-486-58335-9
- Gerold Blümle and Wolfgang Patzig: Basic features of macroeconomics , 4th edition, Rudolf Haufe Verlag, Freiburg, 1999, ISBN 3-448-01878-3
- Lothar Wildman: Macroeconomics, Money and Currency , Volume 2, Oldenbourg Verlag, Munich, 2007, ISBN 978-3-486-58196-6
- Reiner Fischbach and Klaus Wollenberg: Economics I Introduction and Basics , 13th edition, Oldenbourg Verlag, Munich, 2007, ISBN 978-3-486-58307-6
- Heinz-Dieter Hardes, Frieder Schmitz and Alexandra Uhly: Grundzüge der Volkswirtschaftslehre , 8th edition, Oldenbourg Verlag, Munich, 2002, ISBN 3-486-25919-9
- Otmar Issing: History of the national economy , 2nd edition, Vahlen Verlag, Munich, 1988, ISBN 3-8006-1256-9
Web links
- European Commission
- European System of National Accounts (ESA) 1995 ( Memento of July 3, 2013 in the Internet Archive )
Individual evidence
- ↑ Bernhard Felderer: Macroeconomics and new macroeconomics , 9th edition, Springer Verlag, Berlin 2005, pp. 33–34, ISBN 3-540-25020-4
- ^ A b c Wirtschaftslexikon, 11th edition, Gabler Verlag, Wiesbaden, 1983
- ↑ Reiner Clement and Wiltrut Terlau: Fundamentals of applied macroeconomics , Vahlen Verlag, Munich, 1998, ISBN 3-8006-2274-2 , p. 21ff.
- ↑ European System of National Accounts (ESVG) 1995 ( Memento of the original from November 14, 2009 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , accessed November 20, 2009
- ↑ a b c Dieter Brümmerhoff : “National Economic Total Account”, 8th edition, Oldenbourg Verlag, Munich, 2007, ISBN 978-3-486-58335-9 , p. 40ff.
- ↑ a b c d Reiner Fischbach and Klaus Wollenberg: "Economics I Introduction and Basics", 13th edition, Oldenbourg Verlag, Munich, 2007, ISBN 978-3-486-58307-6 , p. 112ff.
- ↑ Gerold Blümle and Wolfgang Patzig: "Grundzüge der Makroökonomie", 4th edition, Rudolf Haufe Verlag, Freiburg, 1999, ISBN 3-448-01878-3 , pp. 75-76
- ↑ Lothar Wildman: Macroeconomics, Money and Currency. Volume 2, Oldenbourg Verlag, Munich, 2007, ISBN 978-3-486-58196-6 , pp. 31-33.
- ↑ All data are from the United Nations Database (UNdata)
- ↑ European Commission ( Memento of the original from October 2, 2009 in the Internet Archive ) Info: The archive link was automatically inserted and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , accessed November 20, 2009
- ↑ State Statistical Office Baden-Württemberg ( Memento of the original from November 8, 2009 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. . Retrieved November 14, 2009.
- ↑ Baden-Württemberg State Statistical Office ( page no longer available , search in web archives ) Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. , accessed November 19, 2009
- ↑ Heinz-Peter Hardes, Frieder Schmitz and Alexandra Uhly: "Grundzüge der Volkswirtschaftslehre", 8th edition, Oldenbourg Verlag, Munich, 2002, ISBN 3-486-25919-9
