Answer to Question #70314 in Macroeconomics for Amul
What is the difference between GDP and GVA?
The Gross Value Added (GVA) and Gross Domestic Product (GDP) give a picture of economic activity from producers (supply side) and consumers (demand side) perspectives respectively. Both GDP and GVA are independent measures. One from demand side and other from supply side. GDP or Gross domestic product of a country is the final value of goods and services for a given period, while gross value added is a metric capturing the value generated by subtracting the input costs. GVA or Gross value added is a productivity metric that measures the contribution to an economy, producer, sector or region. Gross value added provides a dollar value for the amount of goods and services that have been produced, less the cost of all inputs and raw materials that are directly attributable to that production. GDP and GVA are the tools to measure the economic growth of a country. Gross Domestic Product (GDP) measures the values the final goods and services produced within a country while Gross Value Added (GVA) measures the value added to the goods and service i.e it quantifies the productivity of the economy. Gross value added (GVA) is the value addition done to a product resulting in the production of final product whereas Gross Domestic Product(GDP) is the total value of products produced in the country. While GDP gives a picture of whole economy, GVA gives pictures at enterprises, government and households levels. In other words, GDP is GVA of all enterprises, government and households.