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A note on linkage between gross value added and final use at the industry level

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  • Junning Cai
  • PingSun Leung

Abstract

Gross value added (GVA) is a common indicator of an industry/sector’s economic performance. While an economy’s total GVA is always equal to its total final use, an individual industry/sector’s GVA is usually not equal to its final use. Yet an accounting identity between an industry/sector’s GVA and the final use of multiple industries/sectors can be established by a gross value added-final use (GVA-FU) matrix. This paper derives the GVA-FU matrix in the Leontief demand-driven model and its equivalence in the Ghosh supply-driven model and interprets the matrix from different perspectives. The GVA-FU matrix can help policymakers and practitioners better understand an industry/sector’s percentage of gross domestic product (GDP) – the underlying measure behind the United Nations Sustainable Development Goals (SDGs) Indicator 14.7.1 – from the demand-side perspective and facilitate its proper use for policy and planning. The GVA-FU matrix can become a standard component of the input–output apparatus for multiple applications.

Suggested Citation

  • Junning Cai & PingSun Leung, 2020. "A note on linkage between gross value added and final use at the industry level," Economic Systems Research, Taylor & Francis Journals, vol. 32(3), pages 428-437, July.
    • Handle: RePEc:taf:ecsysr:v:32:y:2020:i:3:p:428-437
    DOI: 10.1080/09535314.2020.1718617
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    Cited by:

    1. Cătălina MOTOFEI, 2020. "Agriculture And Manufacturing Sectors' Impact On The Gross Value Added - A Granger Causality Study For European Union And Romania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(22), pages 139-145.

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