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Intermediate and final product. Added value

In addition to the final product, there is also an intermediate one. Most products go through several production stages before they reach the market. Therefore, individual parts and components of some products are bought and sold several times. When calculating GNP, only the market value of final products is taken into account and intermediate products are excluded in order to avoid multiple counting of parts of products.

GNP does not measure the value of all manufactured products, but only the value of final products, i.e. products that are actually consumed and not bought for resale or further processing or processing, and also produced for export. If we were to count the intermediate products, there would be a double count.

Let's consider a simple example. Let, before getting to the final consumer, the product goes through four stages of the production process. Let us take bread as the final commodity. The farmer collected grain and put it on the elevator for the amount of 8 units. The 8 units earned by the farmer are distributed in the form of wages, rents, interest and profits. At the elevator, the grain is ground into flour and sold to the bakery for 12 units. Of these 12 units, 8 units are to be given to the farmer for delivered grain, and 4 units are used at the silo to pay wages to workers, rent payments, equipment upgrades, and for various other purposes. The bakery sells its products to retailers for 18 units, and then the consumer, who is the end user of the product, buys it for 10 units.

What should be included in GNP? 10 units paid by the consumer for bread or 8-12-18-10 = 48 units that are paid along the chain from the farmer to the buyer. It is necessary to include 10 units, i.e., the value of only the final product, which is obtained not by summing the cost of intermediate products, but by summing only the added value, i.e. the value invested in the final product by enterprises at each stage of a single production process. If we added the cost of all intermediate products to the cost of the final product and included the result in the GNP indicator, then we overestimated its volume. There would be a double count, i.e. accounting for the cost of the final product, as well as the sales and resale values ​​of its various components in a multi-stage production process. To avoid double counting, only value added should be included in the calculation of national income.

Value added is the difference between the firm's sales and the firm's purchases of the intermediate products and goods it processes. Therefore, when calculating national income, care must be taken to include only value added.

Intermediate and final product. When analyzing the national economy, an intermediate and final product is distinguished.

By highlighting the intermediate product, we thereby emphasize that a certain part of the social product is intended for the production of other economic goods, and therefore does not leave the sphere of production for a moment.

The intermediate product disappears in the process of production consumption, serving the process of creating other economic benefits.

As an intermediate product can be considered, for example, raw materials, materials, fuel, electricity. But the criterion for such a selection is not the material form of a certain part of the social product, but the corresponding function - the service of production consumption.

On the contrary, the final product, unlike the intermediate product, leaves the sphere of production. In turn, there are two more possible options.

One part of the final product leaves the sphere of production forever and is used for personal consumption in households (food, clothing, apartments, gasoline and recreational vehicles, medicines, etc.).

Another part of the final product also leaves the sphere of production, but only temporarily, since it must return as investment goods and be used to expand production, to restore its potential (see Fig. 4.8). Total social product Intermediate

product End Product Raw Material,

materials Investment

goods Consumer

benefits Fig. 4.8. Intermediate and final product as components of the total social product

Of course, only the final product can be recognized as the strategic goal of the development of the national economy. The intermediate product acts as a kind of "production for the sake of production itself." An intermediate product is only an intermediate goal for the functioning of national production. In the course of production consumption, the intermediate product disappears instantly or gradually, but is immediately materialized in the form of other economic goods.

1 2 3 Intermediate product Men's shirts 5 thousand pieces Final product Pic. 4.9. An example of the transformation of an intermediate product into a final product

On fig. 4.9 cotton, cotton yarn and linen act as an intermediate product in relation to the final product - men's shirts. If an additional stage of processing is singled out in such a technological chain (for example, dyeing or embossing a fabric in a special way), then the mass of the intermediate product and the volume of the total product will immediately increase due to repeated counting.

Unlike the intermediate product, the final product does not have the disadvantages of recounting. This is the mass of economic benefits that can actually be used to satisfy human needs and to expand production.

Gross domestic product. Since the final product is devoid of the disadvantages of repeated counting, this circumstance creates additional interest in calculating this indicator and using it in the process of economic analysis.

The mass of the final product produced in the national economy acts as the gross domestic product (GDP).

To calculate GDP and other macroeconomic indicators, a special system of national accounts (SNA) is being established in the country, which acts as a kind of accounting for the national economy.

In the vast majority of countries in the world, this system is constantly being improved.

The UN Statistical Committee is the methodological center of such improvement. The choice of one or another version of the SNA depends on the level of economic development and the type of economic system used in the country.

Method of calculation. If we single out a group of those enterprises and organizations whose products and services are recognized as the final product, then the totality of products and services of such a range of economic entities will be presented as GDP. Then there will be an appearance that GDP is created only within the boundaries of a certain circle of enterprises in the real sector of the economy.

There are other approaches as well. Let's return to fig. 4.9. In the product produced at each enterprise, it is conditionally possible to distinguish two parts. The first part is the current production costs of raw materials, materials and other valuables (components) that are received for processing from outside. If this part of the costs is taken away from the produced product, then the remainder (the second part) is the added value, that is, that part of the product in monetary terms, which simply did not exist before the completion of production.

Thus, the difference between the volume of sales of manufactured products and the volume of material costs noted above is the GDP created at this enterprise.

GDP acts as a set of value added for a certain period in the entire national economy. Cotton Yarn -> Cotton Yarn

canvas - Men's

shirts 10 10+10=20 20 + 8=28 28+16=44 thalers thalers thalers thalers Fig. 4.10. Calculation of GDP as an aggregate of value added

On fig. 4.10 men's shirts are presented as the final product. GDP is the final product and in this example is equal to 44 units. Let's calculate GDP as a set of added value. There are four technological phases in total. At each phase, value added is created, which is taken into account when calculating GDP. In this example: 10 + 10 + 8+ 16 = 44.

This "production approach" in calculating GDP is important, as it allows you to discover the nature of this indicator; in practice it is used in determining the taxable base, etc.

At the same time, two main methods for calculating GDP have been developed in economic theory:

a) by income stream;

b) by the flow of expenses.

In the first case - the flow of income - it is assumed that the final product is the income of specific owners of production factors who have the right to appropriate the corresponding part of the final product.

Final product

Gross domestic product

Rice. 4.11. GDP (final product) as sum of factor incomes

Such income (see Fig. 4.11) traditionally includes depreciation (wear and tear of the active part of the means of labor), profit, land rent, loan interest, wages, as well as indirect taxes that the government collects and appropriates. Therefore, the “practitioner” is ready to suggest the “theorist”: if a complete and accurate accounting of this kind of income is established (which is in the interests of the state), then there will be a good opportunity to calculate GDP as the sum of the incomes of all owners of production factors.

It is clear that in this case the accuracy of calculating GDP will directly depend on the honesty and civil liability of the recipients of factor incomes to correctly reflect the real amounts. The departure of a part of the national economy into the "shadow" or the emergence of a "shadow economy", on the contrary, will not allow a thorough solution of this problem.

Depreciation Salary Profit Percentage

Income of owners of factors of production

In the second case - the flow of expenditures - the volume of GDP is calculated as the sum of the expenditures of households, businesses, the state, and also the final result of the trade exchange of the national economy with the outside world.

GDP \u003d RDH + i + gz + chei,

where RDH - consumer spending of households or the population;

I - gross investment in the national economy;

PP - public procurement of goods and services;

NEI - net export-import or export income, minus the cost of servicing the import of goods and services.

It is easy to see that the incomes of the owners of production factors are the expenses of consumers for the acquisition of the corresponding goods, i.e., the final product. In subsequent topics of the course, devoted to macroeconomic indicators and the construction of the SNA, these general provisions will be concretized. For now, let's note that the flow of income and the flow of expenses are two views of the same problem. In order to verify the reliability of the volume of GDP, it always makes sense to use these two methods of calculation in parallel (see Fig. 4.12). Income Stream Expense Stream 1. Payments 1.1.

Depreciation 1.2.

salary 3.

Profit 4.

Percent 5.

Rent 1. Population consumption 2.

Investment 3

Government spending 4

Net exports of GDP - total GDP - total 4.12. Comparative analysis of the calculation of GDP by income stream and expenditure stream

When estimating GDP, one should distinguish between nominal and real GDP. Nominal GDP is a calculation of value added at current prices.

Real GDP is the calculation of this indicator in comparable prices or in prices of a certain (base) period.

The ratio between nominal GDP and real GDP is the "GDP deflator":

Nominal GDP GDP Deflator = .

Real GDP

This indicator reflects the level of price increases, or inflation, for economic goods that are taken into account when calculating GDP.

In special economic calculations, actual GDP and potential GDP are also distinguished.

Actual GDP reflects the volume of final product or value added actually achieved.

Potential GDP is calculated taking into account the fuller use of all available factors of production in conditions of achieving full employment.

When comparing the levels of development of national economies, in addition to GDP, the indicator “GDP per capita” is also used.

Let us specifically emphasize that in 1990 (the beginning of a sharp intensification of the systemic crisis of the Soviet economic model), in terms of this most important economic indicator, the economy of Belarus was almost 50% superior to the level of neighboring Poland, had significant advantages over Lithuania and Latvia, and was in fact not inferior to Hungary and the former Czechoslovakia.

It is also necessary to see the difference between GDP and gross national product (GNP).

GDP includes value added produced in the territory of a particular country and without the use of factors of production of other countries. GDP does not include receipts from external economic activities. GNP takes into account the value added created by all national factors of production, including those located abroad (joint ventures, earnings, etc.).

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2.1 Intermediate and final product. Added value

All products produced by the economy are divided into final and intermediate. Final products are products that go to final consumption and are not intended for further industrial processing or resale. Intermediate products go to a further production process or resale. As a rule, intermediate products include raw materials, materials, semi-finished products, etc. However, depending on the method of use, the same product can be both an intermediate product and a final product. So, for example, the meat bought by a housewife for borscht is the final product, as it went into final consumption, and the meat bought by the McDonald's restaurant is intermediate, as it will be processed and put into a cheeseburger, which will be the final product in this case. product. All resales (sales of used items) are also not included in GDP because their value has already been taken into account once at the time of their first purchase by the final consumer.

Only the value of final products is included in GDP in order to avoid double counting. The fact is that, for example, the cost of a car includes the cost of iron, from which steel is made; steel from which rolled products are obtained; the rental from which the car is made. The calculation of the value of the final product is therefore carried out on the basis of value added. Let's look at this with an example. Suppose a farmer grows grain, sells it to a miller for $5, who grinds the grain into flour. He sold the flour to a baker for $8, who made dough out of flour and baked bread. The baker sold the pastry to the baker for $17, who sold the bread to the customer for $25. Grain for the miller, flour for the baker, pastries for the baker are intermediate products, and the bread that the baker sold to the customer is the final product.

Table 1. Value added

The first column shows the value of all sales (total sales revenue of all economic agents) equal to $55 (total output). In the second - the cost of intermediate products ($30), and in the third - the sum of added costs ($25). Thus, value added is the net contribution of each producer (firm) to the total output. The sum of added values ​​($25) is equal to the cost of the final product, i.e. the amount paid by the end consumer ($25). Therefore, to avoid double counting, only value added equal to the value of the final product is included in GNP. Value added is the difference between total sales revenue and the cost of intermediate products (i.e., the cost of raw materials and materials that each manufacturer (firm) buys from other firms). In our example: 55 - 30 = 25 ($). At the same time, all internal costs of the company (for the payment of wages, depreciation, rent of capital, etc.), as well as the profit of the company, are included in the value added.

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To avoid overestimation of the size of the NP, only the cost of the final product is included in its cost. Only a few of the goods and services circulating on the market are final products. Most of them are intermediate products. Thus, iron ore is used not as a final product, but as a raw material for the production of metal, which, in turn, is often included in long technological chains. Steel, for example, will turn into rolled metal, a part of a car will be stamped from rolled metal, and only it will become a consumer item for a person. If we take into account the cost of iron ore at each stage of the technological chain, then it will be reflected in the NP four times.

In order to avoid double counting, goods and services are included in the VAT at value added. To do this, the cost of goods and services that went to intermediate consumption (that is, completely spent or transformed) in the production of this product is deducted from the price. For example, the cost of the metal will be taken into account minus the price of ore and coal; rolled products - excluding steel billets, etc. The entire national product produced, however, will take the form of the sum of the incremental values ​​added at each stage of production. It is called NP cleared of double counting.

GDP and its measurement.

A number of fundamental difficulties stand in the way of a real calculation of NP, and it is completely impossible to solve them. Not a single indicator calculated by statistics will ever fully correspond to the real volume of NP. To overcome this difficulty, science resorts to the approximation method, i.e. successive approximation to an accurate description of reality through the use of a whole system of indicators (SNS).

The main macroeconomic indicator for the real statistical measurement of NP production and consumption is the Gross Domestic Product (GDP). GDP - the value of goods and services produced in the territory of a given country for a certain period of time (most often for a year).

GDP measures both the income in the economy and the volume of production costs. Since, in the final analysis, these values ​​are the same, for the economy as a whole, the volume of income should be equal to the volume of expenditures. Therefore, GDP can be measured in two ways: by summing up all the expenditures of society on the purchase of goods and services produced in a given year, or by adding up the monetary income received as a result of the production of products in the same year. The equality of income and expenses follows from the accounting rule: all expenses for the purchase of products are necessarily the income of the producers of these products.

GDP by income stream is defined as the sum of three components:

1) income of owners of factors of production;

2) depreciation charges;

3) indirect income.

GDP = W + i + R + P + A + KN, where

W - remuneration of employees (wages, including bonuses, additional payments, allowances, etc., calculated before taxes);

i is the percentage for the use of capital;

R - rent payments;

P - profit and income;

A - depreciation;

KN - indirect taxes (primary state revenues).

Expenditures in the composition of GDP are divided into four large groups:

Consumption (C)

Investments (I)

Public Procurement (G)

Net exports (Xn)

GDP = C + I + G + Xn.

This formula not only characterizes consumption, but also describes the structure of macroeconomic demand.

The largest component in the consumption structure is personal consumption (C). This is the demand from households for commodities.

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Intermediate

INTERMEDIATE PRODUCT- part of the gross social product allocated during the year for current material costs (raw materials, materials, fuel, energy, purchased components, assemblies and semi-finished products). The rest of the social product forms the final social product.
The share of the intermediate product in the total social product changes under the influence of factors opposite in direction.

As a result of the deepening division of labor and the specialization of production, the intermediate product can grow faster than the final product; this is also facilitated by the growth of fixed production assets, the acceleration of their renewal, as well as an increase in depreciation rates.

At the same time, in modern conditions, technical progress, the observance of the economy mode, make it possible to consistently reduce the material intensity of production and the energy intensity of products, which leads to a decrease in the share of the intermediate product in the total social product.

In the twelfth five-year plan, the outstripping growth of the final product (machinery and equipment, consumer goods, finished building projects) is achieved in comparison with the intermediate product.

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