GDP / GVA

Introduction

Both Gross Value Added (GVA) and Gross Domestic Product (GDP) are used as an indicator of the economic wealth of an area (country, region, sub-region etc) based on the value of products and services and income generated by businesses.

GVA data is required by the European Commission and is used to inform funding decisions. In certain circumstances it is therefore beginning to replace GDP data. GVA is used to denote estimates that were previously known as Gross Domestic Product (GDP) at basic prices (GDP = GVA + taxes - subsidies on products).

GVA data is workplace based (i.e. the wages and salaries of commuters are allocated to the area where they work, not where they live). GVA data per head of population is therefore significantly affected by commuting into and out of specific areas.

GDP figures per head of population are affected by the age structure of an area, relatively large proportions of persons not of working age, either retired or still at school, will reduce the GDP per head of population figure.

The economic structure of an area; the existence of low value-added service industries and the absence of high value-added manufacturing industries and producer services such as finance, business services and communications; are all likely to contribute to lower GDP figures.

Gross Value Added (GVA)

Changes in Gross Value Added (GVA) per head, 1997 - 2003 (at basic current prices)
	1997	2003	% change in real terms	2003 GVA (£ per head UK=100)
Western Isles	£7,827	£10,078	10.94	66
Orkney Islands '02	£10,966	£10,716	-13.37
Shetland Islands '02	£11,701	£13,197	-0.01
Highlands & Islands	£8,743	£10,524	3.71	69
Scotland	£11,980	£16,383	14.40	96

 

Source: 2003 Western Isles Regional Accounts

 

The table below details the GVA per full-time employee for all the local authority areas within the Highlands and Islands Enterprise area, compared to Scotland in 2000. This is a useful measure of productivity.

GVA PER FULL TIME EMPLOYEE - 2000
Area	GVA per full-time employee
	Manufacturing	Services
Argyll and Bute	25,000	16,667
Highland	27,778	15,560
Moray	44,000	17,600
Orkney	20,000	15,750
Shetland	20,000	17,500
Western Isles	20,000	14,200
Scotland	36,799	18,781

Source: Scottish Executive, Scottish Production Database & Scottish Services Database

 

The table shows that in the Manufacturing sector, the peripheral island local authority areas have the lowest GVA, at £20,000 per full-time employee. This implies that the productivity is lower in these areas, relative to other areas in the Highlands and Islands and Scotland. This is influenced by the nature of the manufacturing activities in the islands, where companies tend to be smaller and less likely to benefit from economies of scale. Additionally, the outputs tend to be of a low monetary value, for example, textiles.

Other local authorities within the Highlands and Islands also have a lower GVA per full-time employee in the Manufacturing sector compared to Scotland, with the exception of Moray.

In the Services sector, all the local authorities within the Highlands & Islands have a lower GVA per full-time employee than Scotland, although the difference is smaller than in the Manufacturing sector. The Western Isles have the lowest GVA per full-time service sector employee.

 

Gross Domestic Product (GDP)

The best source of accurate GDP figures for the Western Isles is the 2003 Regional Accounts. Regional Accounts estimates Gross Regional Domestic Product (GRDP) based on first hand survey work and analysis. GRDP is simply a measure of the total economic activity within a region, and corresponds to GDP at national level.

Western Isles GRDP in 2003 was estimated at £263.02 million. Since the total resident population of the Western Isles in 2003 was 26,100 (General Register Office for Scotland, 2003), GDRP per head in that year is estimated at £10,078.

In 2003 total GRDP and GRDP per head of population estimates for the Western Isles were 66% of the equivalent UK GDP per head of population (£16,383). It was also substantially lower than comparable estimates of GRDP per head for Scotland (£15,409) as a whole.

The production of up to date GDP figures for the Western Isles will be a key component of the recently commissioned 2003 Regional Accounts study.

For more detail on GDP and GVA go to the Economy Section at National Statistics Online