Added Value Concept

In economy, the expression added value designates the difference between the value of produced goods and the costs of the intermediate goods (this is, the goods used to produce other goods such as raw materials and services) used in its production. Thus defined, the added value is formed by salaries, interests and profits (this is, the productive factors incomes) used or added to the production by the company, activity sector or country.

Beyond being used to measure the production added by a company, added value is also used to measure the production of final goods of a certain economy. In fact, by excluding the costs with the intermediate goods, the sum of all company’s added values results in the production global value – it’s the called product calculation in the production approach.

 

 

Translated from Portuguese by Susana Saraiva, Portuguese-English and English-Portuguese translation specialist. Contact: spams@sapo.pt.