Production
From Open Risk Manual
Definition
Production is an activity resulting in a Product. It is used with reference to the whole range of economic activities. The term is not reserved for the agricultural, mining or manufacturing sectors.
It is also used in relation to the services sector. More specific terms may be used to denote production: provision of services, processing, manufacturing, etc., depending on the branch of activity. Production may be measured in various ways either in physical terms or by value.
The SNA defines production as processes or activities carried out under the control and responsibility of institutional units that use inputs of labour, capital, goods and services to produce outputs of goods and services whereby three types are distinguished:
- principal activity, the activity whose value added exceeds that of any other activity carried out within the same unit
- secondary activity, an activity carried out within a single producer unit in addition to the principal activity and whose output, like that of the principal activity, must be suitable for delivery outside the producer unit. The value added of a secondary activity must be less than that of the principal activity, by definition of the latter. The output of the secondary activity is a secondary product
- ancillary activities, which are incidental to the main activity of a producing unit. They facilitate the efficient running of the producing unit but do not normally result in goods and services that can be marketed. For producing units that are relatively small and have only a single location (i.e. enterprises), ancillary activities are not separately identified. For larger producing units it may be useful to treat ancillary activities in the same way as a secondary or even a principal product.
References
- (2008 SNA §§5.5ff., ESA 2010 paragraphs 3.10ff.)
