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Economic Rules

on Wed Apr 19, 2017 2:23 am

Understanding of economics in [Enter Game Name] can be a little daunting, but once you get used to the principles it is quite easy. Essentially, the economic system works to generate the funds your nation has for military procurement and maintenance and new capital projects to improve your nation. All regular maintenance governments pay for healthcare, transportation, services, etc. are factored in and don't need to be accounted for. Your nation's budget is generated each season by adding your nation's domestic taxes based on its Human Development Index Scale and international trade revenues measured through Tradable Goods and Services (TGSs). Additionally, how you manage your economy overall will result in growth or recession from the moderators. Events can also help or hurt your economy.

Domestic Economy and Taxes

The health of your domestic economy is measured by your nation's Human Development Index (HDI) score. The HDI score measures how developed a nation is which in turn helps to measure how effective the nation is at collecting its taxes and properly utilizing them. Countries with lower HDI scores lose large sums due to infrastructural and administrative inefficiencies and corruption within their systems while countries with higher HDI scores can maximize and possibly even grow every taxed dollar that enters their coffers.

HDI projects can be anything that you feel improves the lives of your citizens - new hospitals, new schools, new roads, education initiatives, city improvements, anti-corruption etc. whatever you determine improves the quality of life and health of your domestic economy.

Human Development Index Scale:

Link: Wiki

.1 - .29: Failed State/ Totally underdeveloped
.3 - .49: Third World
.5 - .79: Second World
.8 - .990: First World
1.0 - : Advanced

Cost to Improve DI by .001:
Failed State | Underdeveloped: Population/5
Third World: Population/1
Second World: Population/.1
First World: Population/.05
Advanced: Population/.01

Days to Improve: 1000 x DI Improvements

Saudi Arabia
First World Country | Development Index: .847
Population: 31,000,000
DI Improvement Cost Per .001: $620,000,000
Saudi Government spends: $62 Billion to improve DI by .1
Result: 100 days later Saudi HDI = .947

Taxes here are meant to demonstrate your nation's disposable budget to spend on new capital projects and its military, not your entire nation's tax revenue. In [Game Name] there are two important tax classifications - Nominal Tax Rate (NTR) and the Effective Tax Rate (ETR). The Nominal Tax Rate is what your nation theoretically generates per citizen towards its discretionary spending. The Effective Tax Rate is how many dollars actually go towards the budget once national efficiency is taken into account. Countries below .7 HDI have a lower effective tax rate than their nominal due to losses caused by corruption, lack of infrastructure, and inability to fully deploy tax funds. Once a nation surpasses .7 HDI, they can start to maximize each dollar that enters their coffers. What is considered to be "high taxes" is relative to your nation's HDI, and running too high of taxes for too long will have negative economic effects on your nation.

Nominal Tax Rate (NTR) = What you charge your citizens. Recommended range is $500 - $5000.
Effective Tax Rate = Nominal Tax Rate - NTR(.7 - Development Index)

Example: Third World Country "X"
Nominal Tax Rate: $500
Development Index: .479
Effective Tax Rate: = $160.5 ($500 - 500(.7 - .479)

First World Country "Y"
Nominal Tax Rate: $500 per person per season
Development Index: .910
Effective Tax Rate = $605 ($500 - 500(.7 - .91)

Recommended Tax Ranges
Failed State | Underdeveloped: $100 - $500
Third World: $500 - $1,000
Second World: $1,000 - $3,000
First World: $3,000 - $5,000
Advanced: $5,000 - $8,000

Tradable Goods and Services

A nation's TGS score represents the value of goods and services that are part of the international global economy. The total value is represented by a TGS score. Each TGS unit represents an equivalent value for the good or service boiled down to one comparative unit. If your nation produces oil, your nation's oil industry would possibly generate 100 TGS units for all its oil. If your nation is a financial hub for banks and management firms, the value of those services may also be 100 TGS units. TGS units represent whatever you decide them to be to represent your nation's power on the international stage. How these units generate your nation funds is by trading its TGS units on the international stage. Each equivalent exchange of TGS units generates $10 Million in tax revenue for both nations involved in the exchange. Your nation's effective revenue from its trade agreements is the revenue multiplied by your nation's HDI score. Your nation's TGS score is also reflective of your nation's industrial/ manufacturing capabilities and is also used to manufacture military equipment as well as maintain your forces. It is vital for a nation to balance its "gun vs. butter" i.e. civilian vs. military manufacturing in the deployment of its national capabilities.

Nation X
TGS Score: 1000

Nation Y
TGS Score: 500

Nation Z
TGS Score: 500

Nations X and Y have a trade agreement for 400 TGS. This generates $400 Million in tax revenue for both nations.
Nations X and Z have a trade agreement for 300 TGS. This generates $300 Million in tax revenue for both nations.
Nations Y and Z have a trade agreement for 100 TGS. This generates $100 Million in tax revenue for both nations.

Nation X
HDI Score: .920
TGS Score: 1000
- 400 Nation Y
- 300 Nation Z
TGS Available: 300
Revenue: $7000 Million
Effective Revenue: $6440 Million

Nation Y
HDI Score: .784
TGS Score: 500
- 400 Nation X
- 100 Nation Z
TGS Available: 0
Revenue: $5000 Million
Effective Revenue: $3920 Million

Nation Z
HDI Score: .885
TGS Score: 500
- 300 Nation X
- 100 Nation Y
TGS Available: 100
Revenue: $4000 Million
Effective Revenue: $3540 Million

Developing More TGS
Every $100 Million your nation spends on TGS development, results in an additional 1 TGS unit. The newly developed TGS units become available to trade during the next season. Nations can also invest in other nations to develop TGS units. This will allow larger nations to create better trading partners out of their smaller allies. In the above example, Nation X still has 300 TGS units untraded. It could spend $30 Billion to bolster Nation Y's trading capacity by 300 TGS units. Now each country will reap $3 Billion in additional trade revenue each season. Nothing would stop nation Y from taking that investment and not trading with Nation X, effectively nationalizing Nation X's investments within the country. Unfair trade deals can also be struck whereby for every 1 TGS Nation X trades to Nation Y, Nation Y must trade 2 TGS units. This would generate Nation X disproportionate profits.

Guns vs. Butter Ratio (GBR)
The Guns vs. Butter Ration (GBR) is simply the ratio of TGS spent on trading internationally vs. being used for military procurement. The GBR is equal to the ratio of TGS used for civilian purposes compared to the total. A low GBR indicates a strong military development budget while a high GBR indicates that your nation is utilizing most of its strength for civilian goods i.e. butter. This will have an effect on your people's happiness and running a low GBR for too long will incur the people's wrath!

Military Spending and Maintenance
A significant portion, if not a majority, of your nation's budget will go towards military spending. You can procure the equipment to create the army of your dreams. Every soldier and piece of equipment purchased, however, must be maintained. Placing units in reserve helps reduce the maintenance costs significantly, however, it reduces the fighting effectiveness of the unit. Reserves also have to be mobilized before they can be deployed. Reserves are an extremely cost-effective way to maintain a large force, just remember it reduces your military readiness. See the military rules for specific costs.

Placing units in reserve drops the maintenance cost down to 25% of its typical cost, however, the training tier of reserve units is dropped by 1 point.
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