Value-Added
Comparison of Sales and Value-Added, 2013
Sales figures are not the same as value-added,
which is the concept for measuring a region’s
economic activity or output that involves local
resources. A business or industry’s valueadded, part of its gross sales volume, is what
enters the region’s Gross Domestic Product
(GDP) as a measure of total production with
regional resources. While sales figures are
common measures of firm size from the business
perspective, value-added is a better measure of
the contributions of different businesses to the
economy.
By contrast, some industries, including
construction, oil and gas extraction and health
care, generate relatively more value-added activity
than sales. Those industries are largely labor
intensive, so relatively more local resources,
particularly the local workforce, are utilized.
DIVERSITY AND SP ECI ALIZ ATI ON
The accompanying bar chart compares the
makeup of industries by GDP with the makeup
by sales. As for gross sales, the sector with
the most va