QuoteProject
One way to measure the size of a company, industry, or economy is to determine its output. But a better way is to determine its added value - namely, the difference between the value of its outputs, that is, the goods and services it produces, and the costs of its inputs, such as the raw materials and energy it consumes.
Michael Spence
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Interpretation

What this quote means

The value of a company is better measured by its added value than by its total output.

This quote emphasizes that assessing a company's worth should go beyond merely evaluating the volume of goods and services produced. Instead, the focus should be on the added value, which is the difference between the revenue generated from outputs and the costs incurred from inputs, thus highlighting the importance of efficiency and innovation in creating value within an economy.

Themes

ValueOutputEconomyAdded ValueInput

In practice

Example use cases

A business presentation on how to improve productivity by focusing on added value.

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All countries will eventually need to rebuild their growth models around digital technologies and the human capital that supports their deployment and expansion.
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Developing economies may not have much control over the headwinds that they face today, but that does not mean that they are powerless. Much can be done not just to sustain moderate growth but also to secure a more prosperous and resilient future.
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Reforms aimed at increasing an economy's flexibility are always hard - and even more so at a time of weak growth - because they require eliminating protections for vested interests in the short term for the sake of greater long-term prosperity.
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