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Developing nation - John77 - 19.01.2012 23:52

I've recently started a developing country in a world, and am confronted with very high unemployment, low popularity, no valuable tradable goods, pensions and welfare that do not meet living expenses, debt, and very little infrastructure, any advice on how to proceed?

My initial thoughts were to raise pensions and welfare while cutting income taxes and raising customs, though I do not want a spiraling debt crisis. Any help would be greatly appreciated.


RE: Developing nation - ystradband - 20.01.2012 00:14

Income taxes are your main source of income in a developing country. I'm normally all for cutting these, but wouldn't rush to do so with this template. Customs, on the other hand, provide a negligible income so you may as well cut these and try to stimulate export growth.

Possibly your alliance will be able to start a tax reform at some point or you could use some action points to launch the reform yourself.

Fixing things will take a lot of time. Don't try to do it all at once. Look for tasks that could improve your state without costing too much money. There are usually some early ones that will help you to get the crime rate down.


RE: Developing nation - Rising Phoenix - 20.01.2012 01:06

Leave welfare as is, do not raise as it will have menial effects on your country's living standards.

Focus on infraestructure, rather. Make small investments to PE Administration and Others (I would also recommend raising a tad of Justice as well). Drop customs to a ~2% level.

Keep inflating your money supply and maintani a relatively low interest rate. You need the investment.
Also: A bug! Check his economic page:

http://www.ars-regendi.com/state/111167/detail6.html

The first graph appears as an error to me.


RE: Developing nation - John77 - 20.01.2012 01:34

Thank you both!


RE: Developing nation - Lyu - 20.01.2012 09:46

Rising Phoenix Wrote:
Leave welfare as is, do not raise as it will have menial effects on your country's living standards.


Uh, no. Welfare is a very crucial matter for small and poor states. Once you hit a certain bottom line in the welfare to living costs ratio, the population begins to starve. This normally happens if living costs increase due to inflation - and you want a little bit of inflation, else there will be no economic growth - but you do not adjust welfare (or even decrease it. This is why the liberalism reform is not a good thing for developing countries).

In this state, there are 8 starving deaths, so it might be already very close to this border and an increase in welfare could prevent a big fuckup (when you get several thousand deaths per quarter, your reputation goes down to -5 or something, and your safety rates up to a few 1000 percent).


RE: Developing nation - Rising Phoenix - 20.01.2012 16:14

Lyu Wrote:
Uh, no. Welfare is a very crucial matter for small and poor states. Once you hit a certain bottom line in the welfare to living costs ratio, the population begins to starve. This normally happens if living costs increase due to inflation - and you want a little bit of inflation, else there will be no economic growth - but you do not adjust welfare (or even decrease it. This is why the liberalism reform is not a good thing for developing countries).

Welfare in itself has no effects on the living standards on the long term. You can give people 1.000.0000 of curreny per month in welfare, does not means the general living standard of your country (ie; on average for everyone) has risen. Those 1.000.000 might as well be worthless, in turn.

Lyu Wrote:
In this state, there are 8 starving deaths, so it might be already very close to this border and an increase in welfare could prevent a big fuckup (when you get several thousand deaths per quarter, your reputation goes down to -5 or something, and your safety rates up to a few 1000 percent).

OK, if it is to avoid deaths I agree that it shuold be done, but I suggest a tax reform is implemented afterwards.


RE: Developing nation - Lyu - 20.01.2012 16:55

Well, apart from preventing deaths, welfare (and pensions) can also be used as kind of indirect subsidies (less stimulation than using the direct subsidies, but they have a positive (or negative, if you decrease them) effect on popularity instead), so they are not completely worthless.

And the death thing really is important for developing countries and shouldn't be disregarded. Wink

I suggest to get the welfare up to at least 50% of living costs before doing any reform that affects the economy (especially the Negative Income Tax since it gives a huge and fast boost to the economy - which may be TOO fast for the poor ones to keep up with) .


RE: Developing nation - Rising Phoenix - 20.01.2012 17:22

Lyu Wrote:
Well, apart from preventing deaths, welfare (and pensions) can also be used as kind of indirect subsidies (less stimulation than using the direct subsidies, but they have a positive (or negative, if you decrease them) effect on popularity instead), so they are not completely worthless.

I agree on those grounds.

Lyu Wrote:
And the death thing really is important for developing countries and shouldn't be disregarded. Wink

Most certainly.

Lyu Wrote:
I suggest to get the welfare up to at least 50% of living costs before doing any reform that affects the economy (especially the Negative Income Tax since it gives a huge and fast boost to the economy - which may be TOO fast for the poor ones to keep up with) .

Good advice. Specially since the effect of tax reforms is to decrease welfare & pensions.


RE: Developing nation - Lasfaro - 21.01.2012 01:20

Would this plan work for a developing nation like mine?

I plan to increase Justice , as to help crush my shadow economy so that my normal economy will have more capital put into it

I want to invest in infrastructure , but I'm not sure how

I would cut capital tax, keep my money value at a stable semi-high value as to not increase inflation.

How do I increase my progress?


RE: Developing nation - Lord Alexander - 21.01.2012 13:41

Lasfaro Wrote:
I plan to increase Justice , as to help crush my shadow economy so that my normal economy will have more capital put into it

I want to invest in infrastructure , but I'm not sure how

Spending on “PE justice” is inefficient against “Shadow economy”, it only useful for curbing “Misprisions” and “Capital crimes”.

If you want to develop "Infrastructure" you should increase spending on “PE administration”.


RE: Developing nation - Rising Phoenix - 21.01.2012 15:08

Spending on Justice helps decrease the Shadow economy. I know that because in my state I have only made small increases of PE Justice for a while (alongside a few other sectors, like environment), and the Shadow Economy decreased little by litte.

Problem is, without a good legal economy, you are still going to have a sizeable black market (specially if prices are too high).

I suggest you also spend on PE Others when increase PE Administration; the relationship is not clear but the best infraestructure increases happen when you raise both.


RE: Developing nation - Lord Alexander - 21.01.2012 16:23

Rising Phoenix Wrote:
Spending on Justice helps decrease the Shadow economy. I know that because in my state I have only made small increases of PE Justice for a while (alongside a few other sectors, like environment), and the Shadow Economy decreased little by litte.

Compare your Nova Berlin with my Tianzaar. I spend on “PE justice” five times less than you, but my “Shadow economy” is slightly smaller. Spending on “PE justice” has insignificant effect on “Shadow economy”.


RE: Developing nation - Helsworth - 21.01.2012 16:32

Lord Alexander Wrote:

Rising Phoenix Wrote:
Spending on Justice helps decrease the Shadow economy. I know that because in my state I have only made small increases of PE Justice for a while (alongside a few other sectors, like environment), and the Shadow Economy decreased little by litte.

Compare your Nova Berlin with my Tianzaar. I spend on “PE justice” five times less than you, but my “Shadow economy” is slightly smaller. Spending on “PE justice” has insignificant effect on “Shadow economy”.

PE justice should be increased only via task options.


RE: Developing nation - Rising Phoenix - 21.01.2012 16:34

Lord Alexander Wrote:

Rising Phoenix Wrote:
Spending on Justice helps decrease the Shadow economy. I know that because in my state I have only made small increases of PE Justice for a while (alongside a few other sectors, like environment), and the Shadow Economy decreased little by litte.

Compare your Nova Berlin with my Tianzaar. I spend on “PE justice” five times less than you, but my “Shadow economy” is slightly smaller. Spending on “PE justice” has insignificant effect on “Shadow economy”.

Shadow economy = black market.

Thereby, if I have more policemen and inspectors on the street fighting crime, it makes sense that they will be able they decrease the amount of black marketters on the street, does not it? Rolleyes

The problem here is taxation. Shadow economy is influenced by a number of factors. Your taxation is based around adquicision taxes mostly, while mine's centers around Excises. This means that you take more from your people, but your goods cost less. On the other hand, I take less from my people's income, but my goods costs more. Ergo the lower classes are more inclined to purchase illegal goods from shady bussinesses.


RE: Developing nation - Lord Alexander - 21.01.2012 18:00

Illegal employment and unregistered salaries are part of “Shadow economy” too, thus “Acquisition taxes” should increase it as well. In any case your spending on “PE justice” in Nova Berlin is already enormous for GDR template and it cannot decrease “Shadow economy” very noticeably.

Even if you are right that “Excise taxes” affect “Shadow economy” so badly, it only means that you can decrease “Shadow economy” without increasing your deficit by simple synchronous decrease of “Excise taxes” and of the spending on “PE justice”. Spending on “PE justice” is nearly useless for fighting “Shadow economy” in poor templates.


RE: Developing nation - Rising Phoenix - 21.01.2012 18:09

Lord Alexander Wrote:
Illegal employment and unregistered salaries are part of “Shadow economy” too, thus “Acquisition taxes” should increase it as well. In any case your spending on “PE justice” in Nova Berlin is already enormous for GDR template and it cannot decrease “Shadow economy” very noticeably.

You are correct on this point.

Lord Alexander Wrote:
Even if you are right that “Excise taxes” affect “Shadow economy” so badly, it only means that you can decrease “Shadow economy” without increasing your deficit by simple synchronous decrease of “Excise taxes” and of the spending on “PE justice”. Spending on “PE justice” is nearly useless for fighting “Shadow economy” in poor templates.

ARS Regendi simulates an economy in the most realistic way possible, I am right? If so, it only makes sense that if legal stores only sell expensive goods and illegal traders sell cheap goods, people will buy cheap goods. Just like in the old days of Communism (althrough that was more due to a lack of variety than price in itself).

Initially, when I made my large increases in PE Justice by +10%, along with most sectors, then it yielded sizeable results. My past experiments to leave PE Justice alone did not reduce corruption as much. That is why I increase it if I am increasing other sectors of the economy (but right now I am trying to decrease them via tasks/reforms).


RE: Developing nation - Helsworth - 21.01.2012 18:10

Lord Alexander Wrote:
Illegal employment and unregistered salaries are part of “Shadow economy” too, thus “Acquisition taxes” should increase it as well. In any case your spending on “PE justice” in Nova Berlin is already enormous for GDR template and it cannot decrease “Shadow economy” very noticeably.

Even if you are right that “Excise taxes” affect “Shadow economy” so badly, it only means that you can decrease “Shadow economy” without increasing your deficit by simple synchronous decrease of “Excise taxes” and of the spending on “PE justice”. Spending on “PE justice” is nearly useless for fighting “Shadow economy” in poor templates.

Alexander is correct. In Zane my excise tax is 11.83% while the average state is 16,37%. The shadow economy in Zane is 36% while the avergage state is 48%. In Zane the PE justie is 14 bill while the average state is 11 bill. All my increases are task options related and indexed with inflation.


RE: Developing nation - Rising Phoenix - 21.01.2012 18:20

Helsworth Wrote:
Alexander is correct. In Zane my excise tax is 11.83% while the average state is 16,37%. The shadow economy in Zane is 36% while the avergage state is 48%. In Zane the PE justie is 14 bill while the average state is 11 bill. All my increases are task options related and indexed with inflation.

But I am also correct. Excise taxes contribute to increasing the shadow economy.

Guess I will have to try raising Adquicision, then.


RE: Developing nation - Helsworth - 21.01.2012 19:11

Rising Phoenix Wrote:

Helsworth Wrote:
Alexander is correct. In Zane my excise tax is 11.83% while the average state is 16,37%. The shadow economy in Zane is 36% while the avergage state is 48%. In Zane the PE justie is 14 bill while the average state is 11 bill. All my increases are task options related and indexed with inflation.

But I am also correct. Excise taxes contribute to increasing the shadow economy.

Guess I will have to try raising Adquicision, then.

Just push the liberalism reform.


RE: Developing nation - Rising Phoenix - 21.01.2012 19:19

Helsworth Wrote:

Rising Phoenix Wrote:

Helsworth Wrote:
Alexander is correct. In Zane my excise tax is 11.83% while the average state is 16,37%. The shadow economy in Zane is 36% while the avergage state is 48%. In Zane the PE justie is 14 bill while the average state is 11 bill. All my increases are task options related and indexed with inflation.

But I am also correct. Excise taxes contribute to increasing the shadow economy.

Guess I will have to try raising Adquicision, then.

Just push the liberalism reform.

Mmh... You are correct. I already privatized much stuff, deregulated a litte... I guess it is best if I undergo the massive spending cut now.

(By the way how about we move this conversation to the "Eastern Germany" thread?)


RE: Developing nation - Lord Alexander - 21.01.2012 19:32

After thinking this over again I realized that “Misprisions” and “Capital crimes” are as well pretty high in Columbia template, so it may be not a bad idea to spend more on “PE justice” anyway.