Question

Distinguish between gross value added and net value added.

Answer 1

	Basis	Gross Value Added (GVA)	Net Value Added (NVA)
1.	Definition	The value of output after deducting intermediate consumption but before deducting depreciation.	The value of output after deducting both intermediate consumption and depreciation.
2.	Formula	GVA = Gross Output – Intermediate Consumption	NVA = GVA – Depreciation
3.	Depreciation	Not deducted	Deducted
4.	Reflects	Total new value produced, including wear and tear of capital assets.	Actual value created after accounting for loss of capital assets.
5.	Uses	Used for estimating Gross Domestic Product (GDP) and Gross National Product (GNP).	Used for estimating Net Domestic Product (NDP) and Net National Product (NNP).
6.	Example Application	Used in calculating Gross Domestic Product (GDP).	Used in calculating Net Domestic Product (NDP) or NNP.