Value added by manufacture is a statistic used to measure and compare the value of manufacturing activity. For example, if a state had a total value added by manufacture of $10 billion in 2004 and $20 billion in 2014, its manufacturing activity has doubled. The statistic is one of the chief measures of economic activity that is used by the United States government.
Value added by manufacture is the increase in value of raw material after it becomes a finished product. It represents the effect of manufacturing in terms of money. To compute this value, economists subtract the cost of materials, supplies, containers, fuel, electricity, and contract work from the value of manufactured products as they leave the factory. The value added by a firm is the difference between the firm’s sales revenue and its purchases from other firms.
