Overview
a TL:DR of the game’s manual on economy…maybe not 🙂
Taxes and budget
This is the starting setup, and mainly concerns the early game.
Start by closing borders to emigration.
Max. spending in infrastructure, telecom, environment, tourism (in that order of priority), spending on government should be at about 30% green.
The goal here is to lift your HDL as high as possible (it is at around 80% HDL that your economy begins to take off, and at 100% HDL the boost to economy is the greatest)
The rest of the budget spending will be addressed in the next section.
Get rid of interest rate, as the goal is to max. the economic health bar in the Economy tab.
Set a 50% PIT (a good balance between approval and amount of income)
Now for the most difficult part, and probably the most confusing… Taxes on resources
Since I am dealing with the vanilla game here, there exists a point of autarky for each nation.
That point is reached sooner the lower your initial Economic Strength rating is and the higher your economic health percentage is. Since having a high economic health percentage is good, we want to max. Economic Strength rating.
That is done by maxing out production. Since resources are traded, and if there exists a deficit, the resource will automatically grow by a certain percentage of its already produced amount by a function of its bonuses and default growth percentages. Lets take Engineering for example…
Engineering has a default annual growth percentage of 20% (I do not remember correctly), and it stacks with other bonuses obtained. These bonuses, depending on their condition, such as HDL, can yield positive or negative bonus to the production. For engineering, these are: positions of infrastructure, telecom and education spending slider in the budget, HDL %, economic health %, interest rate, economic partnership treaties (will test whether true at all soon). I assume all of these have a flat bonus proportional to its value.
So what does all this have to do with taxes?
Because how you set your taxes depends on all of those other things, as well as resource’s production, balance and trade of it.
So lets say, your trade is negative, your production is x10 lower than consumption and balance is zero. This is the time when you set a tax of 30% (usually server hosts set that as the highest tax allowed).
Another condition of when you set your tax to 30% is when the production is much higher than the consumption, and you are exporting a resource, AND this resource is located in the bottom three categories. For example, vehicles resource in Japan.
Why focus setting a 30% tax only in the bottom three categories? Because those categories have a greater default growth value, so even if you set a tax of 30%, the resource will not cease to grow.
In most other situations, you would put the tax at 0% either to encourage its growth, or encourage others to import into your country (negative trade, which you tax after it appears, usually at 10%).
Now, as Ive said, the goal is to max out the Economic Strength rating…
Agreements
Economic Strength rating determines who has the priority to export their stuff, and who has the priority to import.
At the beginning of the game, USA starts ahead of everyone else, and gets a big priority to export their services to everyone else, practically shutting down most of the developed economies, if played right. Which is why we can sometimes see USA exporting 10T in services by 2007 or so.
To override this, the game has a common market mechanic.
Common Market is rather self-explanatory. What you have, and what the other country doesnt have, you get to export to them first. If there is any space left for the other country to import, it will do so from the worldwide market. If there is any that you have left, you will export it to the worldwide market as well. This is a condition of a single common market signed between two nations. However, we can have a condition where one nation, that likes to import (China) signs a number of common markets with a bunch of exporting nations (Japan, USA, Germany). Who gets the priority to export to China first? The country that has the greatest Economic Strength of all the nations that have a CM with China.
Economic Strength is a function of GDP and economic health percentage. Perhaps other things such as HDL. GDP is increased via increasing production. Production is increased via creating demand. Once you satisfy your consumption, you trade 0, unless you have a CM.
At the beginning of the game, you want to create an ideal situation to increase your production as fast as possible, so signing CMs is important.
But…
You should only sign CMs if you know for sure that your production will pass your consumption before year 2004!
Now, signing CMs can be a bit tricky. The requirements for signing a CM are as follows:
Relations with you and the country should be at least +20, the country you are signing a CM with must have its Balance above 0 under the condition that it does not have its debt. Knowing that a country spends 10% of the debt to service it, we can sign the CM ASAP.
For example, Kenya has 10b debt, and a balance of 0.9b…granted your country has at least +20 relations, Kenya will sign the CM. However, once balance exceeds 1b exactly, Kenya will refuse.
These are the countries that you need to sign CMs with: Bangladesh, Iraq, Ethiopia, Indonesia, Philippines, Kenya, Tanzania, Pakistan, Nigeria, Turkey, Ukraine, India, China and Iran (only if Free Market).
Bangladesh is first on the list as it is one of the first, if not the first country in the game to get a positive balance, allowing you to sign a CM almost instantly.
Finale
This is Russia in 2007/04/01 doing what is in the guide
