Intermediate goods are products used by businesses in the manufacturing of a final product. They are distinct from capital goods, which are tools used in the production process, and consumer goods, which are purchased by the end user. Intermediate goods are used to increase the value of the final product. For example, a plant could purchase steel to build an automobile. The steel would be classified as an intermediate good, as it is necessary to assemble the finished product.

In order to prevent double counting of GDP, the value-added approach excludes intermediate goods from GDP measurement. This approach is based on the idea that GDP should generally reflect how much value economic activity adds to the overall economy. The value-added approach eliminates intermediate goods from GDP measurement and instead credits the value-added of each transaction as having been created by either one of the two parties involved in the transaction.

Intermediate goods are vital to economic growth and development. Without them, businesses would be unable to manufacture the consumer goods that are necessary for human life. They also provide an essential link between the extraction of raw materials, such as timber, ore, and oil, and the production of finished consumer goods.

In the global economy, intermediate goods are essential to growth and generating wealth. They enable firms to produce a vast array of consumer goods and services, while stimulating economic growth across the world. When companies purchase intermediate goods, they are investing in their own future, as the purchase of these products enables them to produce more goods or produce higher quality ones.

Investment in intermediate goods is also one of the main engines for reducing poverty and achieving goals for human development. By supplying entrepreneurs with the necessary raw materials, intermediate goods enable the creation of jobs and increase economic activity in developing countries. This activity, in turn, increases the incomes of workers and leads to an improvement in their living standards.

In conclusion, intermediate goods are essential for economic growth, development and the production of consumer goods. Without them, businesses would be unable to function, global economic growth would be hindered, and human development goals would be difficult to achieve. They also represent an important part of the global economy, enabling investment in the future and creating jobs and higher living standards in developing countries.