Value Added Definition

Value Added is defined as the difference between the selling price of a good or service and the cost of the inputs used to produce it. The term ‘value added’ is often used in relation to manufacturing, where it reflects the amount of value that has been added to a product at each stage of production.

In the context of economic growth, ‘value added’ refers to the increase in the value of goods and services produced by an economy over a period of time. This measure captures the contribution of each sector of the economy to overall growth. For example, if the value of output from the manufacturing sector increases by 10%, and there is no change in other sectors, then manufacturing has contributed 10% to economic growth.