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Value added by activity
The contributions of primary, secondary and tertiary activities to total value added have changed sharply over recent decades. Agriculture, fishing and forestry are now relatively small in almost all OECD countries. The share of manufacturing has also fallen in most countries while services now account for well over 60% of total gross value added in most OECD countries.
Definition
Gross value added is defined as output minus intermediate consumption and equals the sum of employee compensation, gross operating surplus and taxes less subsidies on production and imports, except for next taxes on products. The shares of each sector are calculated by dividing the value added in each sector by total value added. Total gross value added is less than GDP because it excludes value-added tax (VAT) and similar product taxes.
Industry consists of mining and quarrying, manufacturing, and production and distribution of electricity, gas and water; trade consists of retail and wholesale trade and repair services; real estate covers rents for dwellings including the imputed rents of owner-occupiers; government includes public administration, law and order and defence.
Comparability
All OECD member countries except for Turkey follow the international 1993 System of National Accounts, so there is good comparability between countries as regards the definitions of value added and the coverage of the six sectors. However, the decline of industry and the rise of service activities are overstated to some extent because of the move in the last decade towards outsourcing by industrial enterprises of service activities that were previously carried out internally. For example, if cleaning and security services were earlier provided by employees of a manufacturing enterprise, their salaries would have formed part of value added by industry, but if these services are now purchased from specialised producers, the salaries of the employees will form part of the value added of "other business services”. There will appear to have been a decline in the share of industry and a rise in the share of services although there may have been no change in the quantity of cleaning and security services actually produced.
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Long-term trends The share of agriculture has been declining throughout the period in almost all countries and, towards the end of the period, makes a significant contribution only in Iceland (fishing), New Zealand and Turkey. Shares in industry have also been falling throughout the period. Manufacturing is the most important activity within industry except in Norway, where oil and gas production are more important. All service activities account for around 70% of total gross value added for the OECD countries as a whole, with very high shares in Denmark, France, Greece, Luxembourg and the United Kingdom and rather low shares in the Czech Republic, Korea, Norway and Turkey. It should be noted, however, that, in most countries, the largest part of service value added is goods-related and consists of trade, transport and business services purchased by industry. A high share of service value added does not necessarily mean that a country has become a service economy; the production, transport and distribution of goods remain the predominant activities in most OECD countries in terms of employment and value added. |
Source
- OECD (2006), National Accounts of OECD Countries, OECD, Paris.
Further information
Analytical publications
- Lal, K. (2003), Measurement of Output, Value Added, GDP in Canada and the United States, OECD Statistics Working Papers, No. 2003/4, OECD, Paris.
- OECD (1996), Services: Measuring Real Annual Value Added, OECD, Paris.
- OECD (2002), Measuring the Non-Observed Economy: A Handbook, OECD, Paris.
Methodological publications
- OECD (2007), Understanding National Accounts, OECD, Paris.
Online databases
Websites
- OECD National Accounts Archive, www.oecd.org/std/national-accounts/papers.
- OECD National Accounts, www.oecd.org/std/national-accounts.
Value added in transport, trade, hotels and restaurants
Value added in banks, insurance, real estate and other business services
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