value-subtracting industry

value-subtracting industry
An industry where the value of output is less than that of purchased inputs, so that value added is negative. This situation can arise in two ways: the industry concerned may be heavily subsidized, either by the government or by cross-subsidization from profitable parts of the same firms; alternatively, value subtraction may be apparent only if inputs and outputs are valued at prices other than those actually prevailing. In many former planned economies, for example, parts of state-owned industries were value-subtracting if inputs and outputs were valued at world prices.