How to run a high GDP economy without trade surplus?

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Virtokaii
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How to run a high GDP economy without trade surplus?

#1 Post by Virtokaii » Feb 09 2007

Ok, so I've been playing this game for about two weeks now and I think I have a pretty good grip on most aspects by now. However, the one thing I have yet to understand is how to make the economy of a high GDP nation run without relying on a trade surplus.

With the poorer nations it seems easy; trade yourself to financial nirvana, period!

With wealthy nations like Germany or the US, that strategy only works to a lesser extend, since due to high production costs you wont be able to get good margins on your exports, so I have tried to run my economy primarily on domestic consumption, but so far entirely unsuccessful.

I usually set my tax rate fairly low, with a progressive income tax, low sales taxes, low corp taxes and an overall tax rate between 35% and 45%. The effect is that while I make more money on domestic sales than I spend on production, the social costs always rake in a hefty deficit, which I can only seem to make up for with low margin exports.

I read that many people manually fiddle around with domestic markups, but I've had absolutely no luck with that. My commerce minister typically puts a domestic markup on consumer goods of around 40%. I've tried adjusting it upward and downward, but that seems to be the most efficient setting. If set lower or higher my domestic balance is always worse off.

Decreasing social spending on the other hand , makes people unhappy and decreases GDP, which in turn lowers sales and increases deficits.

I've tried the technology based economy approach, with max edu and cultural funding, higher than recommended infra funding plus building and over funding several research centers, but so far the consequences have, at best, been neutral. I know that this is a long term development, but over the course of several months I haven't reaped any rewards so far. Usually it causes inflation to increase to about 10%, lowers unemployment to around 3% and shows no financial rewards.


So, to sum up, I'm looking for a comprehensive strategy on the handling of high GDP economies that doesn't rely on exports.

And on that not, I have some difficulty understanding the role the WM plays in the international market. Do they only sell, or also buy your products? If yes, what goes into determining what and how much they buy from you? Also, the supply of WM goods seems to fluctuate in quantity, sometimes dramatically, which seems weird considering the AI doesn't build econ buildings, so theoretically the only thing that could increase demand is player economy expansion and overall pop growth, right?


Looking forward to your suggestions!

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tkobo
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#2 Post by tkobo » Feb 09 2007

I pick key products the population wants and push the price upwards til i see a continual profit in the budget area. IE Pro cash flow

I usally go with consumer goods,oil, power.i do sometimes go with even more product cost rises, but its often not needed.

The effect i like best about this is that it ,not only can get you more money for less work, but it also lowers other expenses.
Because , for example, if i need less consumer goods made, i also need less industrial goods made,less oil produced, less coal, and ore, etc..

It creates a large decrease in production costs which are usually a very high expense for high gdp regions.

The only social service i worry about right off the bat,is infrastructure.I max that out.I do this becuase it raises the production of facilities.

I assume your running a democracy ?

If so, you'll need to bank and keep alot of the pro cash flow,so that you can use it for a pre -election blitz.

I usaully wait til a month or two before an election, than turn off taxes, lower all domestics prices to as close to zero as i can.
And let the country eat up the treasury and stocked resources.
By doing this, i can often go from a 11% of less to a 40% or more in voter share

Yes, my people always seem to have a very short memory :P
But hey, im not so sure real life people dont themselves, so i can live with this mechanic.
This post approved by Tkobo:Official Rabble Rouser of the United Yahoos
Chuckle TM

Virtokaii
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Joined: Jan 29 2007

#3 Post by Virtokaii » Feb 09 2007

Ahem, you're the reason there are term limits! :D

Now, about the domestic pricing, do you adjust one good at a time? Is the desired affect immediate, or do you have to wait for it? If yes, how long?

I assume once you set domestic markups yourself, you lock out the minister from that product, right?

Also, with an economy like, say Germany, what kind of domestic surplus can you reasonably expect?

And lastly, what exactly are the in game effects of inflation? (Please no lectures on RW effects, I know...)
I would assume it lowers DAR and GDP, so conversely, if both are still rising, or at least remain at constant levels, shouldn't that mean you can afford your current rate of inflation, even though it were ridiculously high?


Edit: Also, I'd really, really like some answers to my WM questions, it really bugs me not knowing, thx.

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tkobo
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#4 Post by tkobo » Feb 09 2007

Virtokaii wrote:
Now, about the domestic pricing, do you adjust one good at a time? Is the desired affect immediate, or do you have to wait for it? If yes, how long?
I usauly do at least the above mentioend 3, right from the start.
Time depends on the price increase.It can be almost instant, from a day to a week IF you max prices.
Virtokaii wrote:
I assume once you set domestic markups yourself, you lock out the minister from that product, right??
I lock the ministers out before i even let the time run for new a game :P
Id just execute them or jail if i could- but sadly that feature didnt make the cut.
Virtokaii wrote:
Also, with an economy like, say Germany, what kind of domestic surplus can you reasonably expect?
Again depends on the price increase.Max out the price and its very easy to accumulate a years worth of stocked up resources
Virtokaii wrote:
And lastly, what exactly are the in game effects of inflation? (Please no lectures on RW effects, I know...)
I would assume it lowers DAR and GDP, so conversely, if both are still rising, or at least remain at constant levels, shouldn't that mean you can afford your current rate of inflation, even though it were ridiculously high?
I dont worry about inflation.Its pretty much just a reaction tied to gdp in the game,that i can ignore pretty much as far i am concerned.

On some related side notes, expect this method of economy to lower your gdp.
And also expect that you might have to do some resource facility building regardless of the usage decrease(due to price increase), as some regions are just too short on a particular resource for this method to accomplish everything on its own.

My AAR in that forum shows how the early steps work and how fast.
This post approved by Tkobo:Official Rabble Rouser of the United Yahoos
Chuckle TM

Virtokaii
Warrant Officer
Posts: 34
Joined: Jan 29 2007

#5 Post by Virtokaii » Feb 15 2007

Ok, whatever I do, I don't seem to be able to get this to work. As a last resort could you, or someone else, send me a savegame of yours, so that I can see what exactly it is you're doing differently?

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tkobo
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#6 Post by tkobo » Feb 15 2007

check your personal messages.
This post approved by Tkobo:Official Rabble Rouser of the United Yahoos
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