Gross value added (GVA) quantifies the value of goods and services produced by a company, by an industry sector, within a certain region of an economy, or by an economy as a whole. The GVA of a company directly quantifies the contribution to the gross domestic product (GDP) of the country of operations. As such it is themeasure of economic growth and quantifies a company’s contribution to national economic wealth. Often, policy targets are formulated in terms of GDP, a prominent example being the Europe 2020 strategy target of increasing combined public and private investment in R&D to 3% of GDP. The GVA is thus key to being able to directly compare a company’s performance to such strategy targets.
Novartis has translated its business figures into this macroeconomic rationale and has, besides its direct impact, studied its economic impact along global supply chains. There, GVA and employment effects occur as “ripple effects” through third-party spend (intermediate consumption). Going a substantial step further, induced effects arising through the spending of wages by Novartis staff and the spending of its suppliers’ labor force were also considered.
The impact analysis was performed for different geographical and operational regions, i.e. in regions where the contribution occurred and where it was triggered, respectively. By adhering to the concept of the System of National Accounts, the analysis provides a high level of significance and comparability with official macroeconomic indicators. It thus forms a sound basis for informing different stakeholders and improve decision-making by uncovering the economic relevance of Novartis business activities along its global upstream supply chain.