Value Added

Hi Alex. Output is a measure of the total value of all goods produced within a region. Value added is a subset of output. An industry buys goods and services (of them considered inputs) and uses those goods and services to create a product of greater value (output) than the sum of the goods that goes into its product. Usually, analysts will focus on output because it is bigger than value added. While output is a good measure of economic activity, as an indicator value added provides a better measure of the increase in economic activity in the local economy. Value added represents the wealth created by industry activity. In IMPLAN (or any social accounting matrix), this is the sum of value added. Thus, value added is a useful measure of wealth creation in an economy. Please let us know if we can be of further help.