Intermediate good

Intermediate goods or producer goods or semi-finished products are goods used as inputs in the production of other goods, such as partly finished goods. Also, they are goods used in production of final goods. A firm may make then use intermediate goods, or make then sell, or buy then use them. In the production process, intermediate goods either become part of the final product, or are changed beyond recognition in the process.

Intermediate goods are not counted in a country's GDP, as that would mean double counting, as the final product only should be counted.

The use of the term "intermediate goods" can be slightly misleading, since in advanced economies about half of the value of intermediate inputs consist of services.

Examples

• Sugar - sugar is used as a final good (when it is sold as sugar in the supermarket) or as an input (when it is used to make candy)
• Steel - a raw material used in the production of many other goods, such as bicycles.
• Car engines - Some firms make and use their own, others buy them from other producers as an intermediate good, then use them in their own car.
• paint, plywood, pipe & tube, ancillary parts, etc.
• An interesting example is the use of chlorine in the production of polyurethane, which contains no chlorine. Rock salt is electrolyzed to produce chlorine, which is reacted with carbon monoxide to give phosgene. Phosgene, a chlorine compound, and a diamine are then reacted to produce a diisocyanate and hydrochloric acid that is neutralized in situ. The diisocyanate reacts with a diol to produce polyurethane, which contains no chlorine. Chlorine is used because chlorine is electronegative enough to produce an isocyanate, but does not become a part of the product; it lowers the atom economy.

See also

• Intermediate consumption