GROSS VALUE ADDED AS THE MAIN INDICATOR PRODUCTIVITY OF ENTERPRISES


Keywords: productivity, enterprise, estimation, issue, profit, gross value added

Abstract

Topicality. Traditionally, output and profit are used as the main indicators of enterprise productivity, but they have significant shortcomings. All this determines the relevance of the search for new indicators that will provide an adequate idea of the productivity of enterprises and a single conceptual basis for assessing the results of economic activity at the micro, mega and macro levels.
Aim and tasks. To analyze the existing indicators for assessing the productivity of enterprises, to identify their main short comings. Consider the experience of the Republic of Belarus in the use of gross value added as an indicator of productivity of enterprises. Justify the use of gross value added as a conceptual basis for assessing the results of economic activity at the micro, mega and macro levels. Identify the main indicators for assessing the productivity of enterprises on the basis of gross value added.
Research results. As the main indicators of the enterprise, use "output" and "profit". The first indicator consists of gross value added and intermediate consumption and therefore it depends on the performance of other enterprises. In this case, the external contribution can be decisive and therefore the indicator "output" does not give an adequate idea of the productivity of enterprises. Another key indicator of enterprise activity is profit. With a focus on it, wages, social security financing and employee training are the costs of the enterprise and the smaller they are, the greater the company's profits. But in modern conditions to ensure sustainable economic development of the individual enterprise and the country as a whole, it is important to consider that employees are carriers of intellectual capital. The loss or reduction of this capital can lead to more significant losses than the loss of physical and financial capital.
Under such conditions, it is advisable to change the benchmark, namely the use of gross value added as the main indicator of productivity of the enterprise. It is on the basis of this indicator that the main result of economic activity of the country (gross domestic product) and regions (gross regional product) is determined. Gross value added is a very important indicator in terms of meeting the needs of all stakeholders in the performance of the enterprise: employees, business owners, the state. The indicator "gross value added" is the main indicator of the enterprise in terms of the interests of society as a whole, and the indicator "profit" - the main in terms of the interests of business owners. The presence of these two indicators reflects the contradiction between the interests of society and business owners.
Conclusion. Gross value added has a greater analytical value than the indicators "output" and "profit", because, firstly, it gives a more adequate picture of the results of enterprises, secondly, it determines the potential for capital accumulation and thirdly provides a single conceptual basis for evaluation of economic performance at the micro, mega and macro levels.

Author Biographies

V.F. GORYACHUK

Dr. Sc. (Economics)
Institute Of Market Problems And Economic&Ecological Research of the
National Academy Of Sciences Of Ukraine
Frantsuzskiy Boulevard, 29, Odesa, Ukraine

Y.A. NAZARENKO

Postgraduate student
Institute Of Market Problems And Economic&Ecological Research of the
National Academy Of Sciences Of Ukraine
Frantsuzskiy Boulevard, 29, Odesa, Ukraine

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Published
2020-06-20
How to Cite
GORYACHUK, V., & NAZARENKO, Y. (2020). GROSS VALUE ADDED AS THE MAIN INDICATOR PRODUCTIVITY OF ENTERPRISES. Economic Innovations, 22(2(75), 25-33. https://doi.org/https://doi.org/10.31520/ei.2020.22.2(75).25-33