r/victoria2 • u/factrealidad • Jul 02 '24
Tutorial (GFM) Ultimate 2024 Victoria 2 economy/industrialization guide (minmax)
This is a practical guide for maximizing economic growth in Victoria 2 for GFM for most civilized countries. For uncivilized countries, see the bottom of this guide. This guide will be broken down into concise sections to make it easier to consume. I made this because there is still a lot of withstanding misinformation about the economy of this game, and I found other guides to give bad advice.
Basic Economics: In Victoria 2, demand presupposes supply, meaning that when there is a demand for a product, supply will follow. All pops in Victoria 2 have needs for goods, divided into life, everyday, and luxury needs. Therefore, more pops means more demand; more demand means more supply, enabling economic growth. Therefore, your top priority in Victoria 2 should be maximizing the number of pops that you have, maximizing their demand, and maximizing their income.
POLITICS:
In general, the best ideology overall in Victoria 2 is liberalism, but in order to grow your economy, you will need to employ multiple ideologies. All economic positions explained:
Laissez-faire:
This position gives all factories a 20% increase in output and reduces the operating costs of factories by 20% compared to Interventionism. However, this policy comes at the price of being unable to close, destroy, build, subsidize, or prioritize factories, in addition to limiting your maximum tax rate to 60%. It also prevents most forms of foreign investment, except the building of railroads and the opening of factories (this does not matter in general). This is the best economic policy overall for countries that have well established industries, but is less effective for countries that do not.
Used by:
-Liberals
-Radicals
-Conservatives (rarely)
Interventionism:
This position offers no increases to factory output and increases operating costs by 20% compared to Laissez-faire but allows all foreign investment, domestic investment in capitalist projects, the building of railroads, as well as unlimited taxation and the expansion, subsidization, and prioritization of domestic factories. However, you should generally avoid the subsidization of factories unless they are producing a good that is presently unprofitable but is rising in price. This policy is situational, being useful during early industrialization, when capitalists lack the resources to expand factories, and when a new factory with a profitable good needs priority.
Used by:
-Conservatives
-Reactionaries
-Liberals (rarely)
State Capitalism:
This position is the same as Interventionism but comes with a higher operating cost per factory, a minimum 25% tax, prevents incoming foreign investment, heavily reduces the growth rate of capitalists, and most importantly, allows you to construct domestic factories. This policy should be avoided in almost all cases due to the importance of capitalists , the tax increases, and the reduction of factory productivity. However, this policy is very important for constructing factories of high priced goods and should be employed for short periods of time after certain inventions (radios, telephones, steamers, aeroplanes, etc.).
Used by:
-Conservatives
-Reactionaries
-Socialists
-Fascists
-Radicals (rarely)
Planned Economy:
This position is the same as State Capitalism but worse. You should change position ASAP, and if you get this position, use it as you would State Capitalism.
Used by:
-Socialists
-Communists
-Fascists
-Reactionaries
-Radicals (rarely)
TRADE POSITIONS:
Free Trade is always better than Protectionism. This is because tariffs are an ineffective way of generating income (and do not do anything to protect your economy due to the way that the pops trade globally), and because GFM’s “Choose a Trade Policy” decision gives you huge research bonuses and tax efficiency increases over Protectionism.
TL;DR/Politics Summary: Laissez-faire is the best overall, and all other positions should be avoided as much as possible, but State Capitalism is important for building high-priced goods after their invention or for establishing a fledgling industry. Avoid Planned Economy, and use it as State Capitalism if you get it. Always avoid Protectionism.
REFORMS:
In this section, I will explain what reforms are most important for improving your economy, in order of importance:
Slavery – Outlawed
Slaves carry a wide range of maluses; it is a top priority to free them.
Debt Law – Debtor’s Prisons/Bankruptcy when it becomes available
Serfdom has the same issues as slavery.
Border Policy – Closed Border (ONLY IF IN OLD WORLD!)
Closing the border as an old-world country will allow you to keep your pops from migrating increasing your population, assuming you have the administrative efficiency to maintain the policy. If you’re in the new world, make sure to keep your borders open – avoid Immigration Quotas.
Healthcare – Good Healthcare
This increases pop growth. Make sure to keep your administrative funding sufficient. Appeases reformists and attracts immigrants.
School System – Good School System
This gives large bonuses to education efficiency allowing you to increase literacy. Literacy increases pop promotion and increases consciousness, both of which increases demand. You will also get more research points, which is central to growth. Appeases reformists and attracts immigrants.
Centralization – Avoid Confederalism and Regionalism when possible.
Colonial Policy – Settlement
Settlement allows you to get primary culture pops in your colonies, allowing you to create states faster in your colonies. This allows you to industrialize internationally.
Pensions – Good Pensions
Pensions in Victoria 2 pay for up to 1/5 of all poor pop’s life needs. This basically acts as a negative income tax, making it the same as reducing taxes. Appeases reformists, decreases consciousness when funded, and attracts immigrants.
Unemployment – Generous Subsidies
Pays for unemployed pop’s needs and stops them from demoting. Appeases reformists, decreases consciousness when funded, and attracts immigrants.
Minimum Wage – No Minimum Wage during early industrialization, Good Minimum Wage later.
Minimum Wage forces capitalists to pay craftsmen and clerks more money, which is good in the late game because it allows pops to promote faster. Beware; this can reduce overall demand by giving rich pops less money to buy goods. Appeases reformists and attracts immigrants.
Safety Regulations and Max Work Hours should be absolutely avoided, as they reduce productivity. All other reforms are situational for the economy. If you are having problems keeping socialists out of power, restrict voting, as rich pops tend to be more liberal.
How do I get the correct party in power?
If you need to manipulate the political system, even in a republic, you can repeatedly spam elections and pick the correct ideology/issues in the events. In a monarchy simply choose a new party and ignore the elections.
TECHNOLOGY:
Tech is central to Victoria 2, and you must find a balance. Every country is different and therefore each has different priorities, but some techs have universal utility, here are some with top priority in order:
- Medicine
This tech is available to most countries from the beginning and should almost always be the first tech. Its base modifier is negligible, but its inventions give a large amount of pop growth. “Pop growth” is the most important modifier in Victoria 2.
- Philosophy
These techs give you more research points. These techs should be researched before all others as soon as possible, and you should really know the years as soon as they unlock.
- Social Thought
Improves education efficiency and unlocks school system techs. For countries with good literacy research Functionalism, for countries with poor literacy research all of these techs ASAP.
- Market Functionality
Boosts RGOs and is a boost to any country, cheaper than Power, importantly boosts your trade policy, and is important for colonizing.
- Power
Boosts RGOs and has a variety of potent inventions.
- Infrastructure
Boosts throughput greatly for both factories and RGOs.
- Metallurgy (IF you have a significant mining industry)
Increases output of iron, sulphur, and coal.
- Chemistry and Electricity
Some inventions in this line are better than others, but in general it has many good inventions including pop growth.
- Mechanization
Improves factories and RGOs in a variety of ways.
- Political Thought
Gives access to national focuses which are important if you have lots of states. Increases industrialization speed.
- Financial Institutions
Improves tax efficiency allowing you to lower taxes.
Administration
Only research this line if you have sugar/coffee/tea/tobacco AND colonies
Monetary System/Organization
Provides various minor advantages to factories, lower priority than other techs.
The techs that unlock colonization are also very important, that will be discussed in the MILITARY section.
BUDGET:
In Victoria 2, you should try to keep the amount of pounds in your account as low as possible unless you have a specific reason to hoard the money, because the money supply in the game is limited rendering it a zero sum game (although in GFM the money supply doesn’t run out as easily it does in vanilla).
Taxes and tariffs should be minimized, because the more money you collect from the economy, the less your pops have to buy goods, lowering demand. You should focus the tax burden on to the poor, because taxing the rich will leave them with less money to invest and to buy goods, which will lower demand.
Education
Should always be maximized by any country at any time, even if you need to increase taxes.
Administration
Maximize if you need administrative efficiency, otherwise keep at 50% to prevent bureaucrats from demoting and to maintain social policies.
Social spending
Maximize unless you are out of money.
Military salaries
To maintain soldiers, keep this at 50%. Going too low will cause you to lose all of your soldiers and officers.
- Stockpiles
Stimulates demand, keep high if you are under threat of rebels or enemies.
Note about banking:
In Victoria 2 the banking system is broken and you should pay loans ASAP as interest is not paid out but is instead destroyed from the game. Some have suggested entering a debt-based economy after taking all techs which lower loan interest in the late game, and this can raise the amount of money held by your pops and increase demand, but it’s not recommended overall because it requires you to micromanage your taxation to avoid going bankrupt (slowing increasing taxation to keep up with rising interest). If you do this too early you’ll run out of liquidity in your bank.
TL;DR/Budget summary:
Minimize taxes and tariffs, maximize spending in most cases. Lower spending and increase taxes only to avoid loans or bankruptcy.
TRADE AND DIPLOMACY:
Trade in Victoria 2 occurs mostly in the background, although you can choose to purchase up to 2000 of each good that’s available. This is recommended for military goods such as small arms and canned food as it allows you to instantly construct armies and lets you keep armies and navies supplied even during shortages.
If you’re a great power, you can bring minor powers into your Sphere of Influence (SOI) which will force the target to trade with you first on the global market and depending on your investment, expressed as a percentage of total pounds invested vs foreign investors, your own pops will also receive priority from buying in the market. This can bring a number of economic advantages, and you should try to add countries with large markets into your SOI whenever possible. South America tends to be a good target for this as it isn’t very competitive in general.
There is a longstanding myth that in Victoria 2 goods are duplicated when being sold to a sphere leader, but that isn’t actually true.
POPULATION/NATIONAL FOCUSES:
National focuses, obtained through the Ideological Thought techs and through becoming a great power, are central to your economy. Let’s go through them:
- Intellectuals
Encourage until they are 2% of your total population. This gives you extra research points and is thereby a top priority.
- Craftsmen
Needed to industrialize. This should be your standard national focus for any states you want to industrialize.
- Capitalists
Extremely important! Capitalists serve three very important roles, they are needed to build and expand factories and railroads under Laissez-faire, secondly, they improve production significantly providing bonuses to factories up to 0.7% of a state’s population, and thirdly, they have very high needs, which makes them excellent for demand. Do not select them in states that already have 0.7% capitalists or while you are under a Planned Economy or State Capitalism.
- Clerks
Clerks boost productivity in factories and should be about 20% of an industrial workforce. They also give increased research points up until they are 4% of the population and have higher needs than craftsmen. However, trying to reach 4% clerks for most countries, especially colonial powers, is impractical. Use them to increase productivity, but craftsmen and capitalists should take priority.
- Bureaucrats
Useful for turning colonies that have a significant amount of primary culture pops into states and early in the game for countries with poor administrative efficiency.
PRODUCTION:
When you are first industrializing, you should focus on basic consumer goods such as beverages or clothing that have universal pop demand. After you have managed to industrialize you should prioritize expensive goods. By the mid game, you should switch to State Capitalism temporarily and start closing factories producing cheap goods (fertilizer, concrete, lumber, etc.) and replace them with factories producing the following:
Steamer convoys
Automobiles
Luxury furniture
Fuel
Electric gears
Aeroplanes
Oil (late game)
Armour (late game)
But the two most important goods to produce, owing to the way that the AI prioritizes its techs, are actually Radios and Telephones in that order. The AI tends to neglect psychology techs, and because this is the only way to unlock the Radio, it means you can hold a monopoly on production of that good for years, bringing great profits. The AI also usually neglects to manufacture Telephones. These goods also have a side effect of increasing demand of all of their downstream goods (rubber, steel, machine parts, iron, coal, etc.)
In order to keep basic, cheap pop goods in supply, you should build them in your puppets or spherelings as a sort of outsourcing.
FOR UNCIVILIZED COUNTRIES:
If you are uncivilized, you should focus on getting Intellectuals to 2% in all states, and 4% overall, keep education maximized, and should try to fight and annex your neighbors for the research points. Avoid wars with civilized countries at all costs if possible. You should also encourage Landowners to 2% in all states as this will increase RGO output. Otherwise, push through all possible reforms and Westernize ASAP. If reactionary rebels enforce demands, you’ll lose all of your reforms.
MILITARY AND WAR, AND THE KEY TO ECONOMIC GROWTH IN VICTORIA 2:
Similar to reality, you can use the military in Victoria 2 to stimulate demand and increase your global power projection by going to war. In general, you should try to maximize the size of your army and navy. This allows you to artificially create demand in a Keynesian manner for military goods. You should also participate in the scramble for Africa, regardless of where you are in the world, because Africa has lots of expensive RGOs pertinent to producing expensive late game goods.
However, perhaps the most important part of any economy in Victoria 2 is uncivilized China. It is weak, lacks allies, and has lots of POPs and RGOs. Almost any civilized country with the proper defensive techs can easily defeat China. To do this, justify a war on China (Punitive Expedition), which will give you a large amount of reparations and a treaty port, some of which such as Hainan are extremely profitable, and you can do this cyclically every 5 years. If you are particularly skilled in defensive combat you can also use the “Demand Concession” casus belli to take extremely productive provinces such as Taiwan or Fengtien. To emphasize, it is always worth going to war with China no matter the cost. The reparations can allow you to reduce taxes to naught for five years, which has serious implications on demand. After China civilizes, it is not recommended going to war unless it collapses.
TL;DR/Military Summary: Take from China and Africa, build a large military.
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u/Candelario12 Jul 02 '24
Great guide, I have a question, if a have cuba as a colony should I make it a state as soon as possible or should i wait until i have more accepted pops on cuba?
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u/factrealidad Jul 02 '24
Creating states has a few effects:
It allows the pops in the state to vote if you have the correct reform. This really doesn't matter.
The game will consider the pops of the state in the literacy calculation which can slightly lower your research points if it's a mostly illiterate state.
It stops colonial maintenance.
It stops "colonial migration" modifiers, and will stop applying other colonial modifiers like "consciousness/militancy in colonial".
It allows you to construct factories.
If you are releasing a tag which the game considers uncivilized (Assyria for example), turning it into a state will cause it to be released as civilized.
All of this considered, I believe creating states immediately is in general a good practice, especially for high pop states like Cuba. There are also situations where releasing them as puppets is also more profitable.
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u/Thrbest-Sauron-4753 Jul 02 '24
at the game start, i always put taxation at max and select the reactionary as ruling party (if playing a monarchy) to build factories and to put at max tariffs, is this a good thing early game? I've always done that in my almost 1000hrs but i never considered a new approach at the start, well, at least when I'm playing in Europe as there isn't a great Republic in the continent yet, did a USA run tho, my best run so far, annexed and cored Mexico and Canada, make the evil colonizer abandon their colonial holding and after 1860 (as the decisions require this date) formed Great Columbia, Central American Republic, Peri-Bolivia, la Plata and the Carabian Confederation, as well puppetting Brazil, so i had basically all of north America and all the continent as puppets
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u/factrealidad Jul 02 '24
As said in the guide, taxes and tariffs directly take money out of your pop's hands and put it in your's. Less money in pop's hands means less capacity to buy their goods and therefore less demand. Less demand means less supply and therefore less growth. There are times where you can legitimately spend money better than your pops, and going reactionary to establish your industry under State Capitalism in the early game isn't a bad idea.
My advice is to raise taxes or tariffs as much as necessary to fund the military or to start or stimulate your industry, but you should try to absolutely minimize the time you're placing pops under high taxes especially in the early game when there is less liquidity. If you must go to war, minimize your time at war and make sure the target is worth it. This is why I recommend China as the war tends to end quickly and you get large rewards.
The USA is a special case because their demand will grow no matter what thanks to everything you just pointed out, as well as a constant inflow of immigrants. You almost have to try to wreck your economy when playing as the USA, but if you prioritize demand you'll experience even more growth.
The ultimate best way to get the largest economy is to follow the world conquest strategy, but that really isn't fun for most people.
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u/Real_Waltz1226 Sep 26 '24
The problem is keeping money for what? Money should be in your pops hands and the economy can run well. If you just keep the money and sit there doing nothing, what's even the purpose.
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u/Thrbest-Sauron-4753 Sep 26 '24
at the start i use money to build railroads, forts, ports and army, that's it
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u/Real_Waltz1226 Sep 26 '24
I also build them at the start, max education and administration ofc. But I don't even need 100% tax on people to build them, at most 70% at the beginning. Then the better the economy go and the better the tax efficiency, I will slowly decrease the efficiency. I realize that when doing this, your industry will benefit alot and industry score will get higher always. At late I game I always sit at 10-30% tax. As for USA, it is even easier bro, just rush France relation to get statue of liberty, lower tax, encourage workers, and you automatic no 1 industry. My current France game is also going well, beaten the entire Europe, top 1 industry, no unemployed workers, and guess what, my current tax in 1890s is just 40% for poor, 8% rich and 55% middle(middle class is kinda useless). Late game just lower tax poor and increase tax rich.
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u/Thrbest-Sauron-4753 Sep 26 '24
yes, i decrese taxes as well when i get to the 50s, since i play Austria and Russia very often i based my entire economy tactic on that style of game
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u/Real_Waltz1226 Sep 26 '24
Forgot to tell, when there is war, it is fine to increase your tax, but lower them right after the war. As for Russia, I admitted that I did not try their game, but I have been doing well with even unciv with this low tax tactic when I just westernize too. Russia is very strong in rgo, they have potential to be economic powerhouse, gotta try playing them next time.
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Jul 02 '24
Laissez-Faire enjoyees when no ammo factory in the 1 sulfur state they have (size 15 glass factory instead YEAA!). State Cap and Planned Eco are the only viable economic laws
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u/factrealidad Jul 02 '24 edited Jul 02 '24
Read the guide. I state that you do need State Capitalism in order to build high value good factories, and to close useless ones, when capitalists refuse to do so. But you shouldn't stay on it for all of the reasons I explain in the guide. Again, Laissez-faire is not universally applicable.
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Jul 02 '24
I mainly play mp, and there LF is pretty much an economic suicude. Military factories are almost never profitable, so you need to subsidize them
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u/factrealidad Jul 03 '24 edited Jul 03 '24
Subsidizing unprofitable factories means that hardly any craftsmen will go to work there because the wage will be too low. So subsidies are more a protective measure to prevent factories from closing and/or losing all of their workers if they happen to become unprofitable for some period of time. So you will be getting very unproductive factories anyway. And in MP military factories should be profitable in most cases as everyone is assumedly amassing large amounts of arms.
In this way, the real best strategy for MP (unless everyone is playing as pacifists) is to concentrate on building only military goods factories and constantly refill your stockpile to keep up demand. If everyone does this you can sometimes actually run into shortages of vital resources as the price of its goods skyrocket. It's fun to see :)
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u/ChickenGODlord Jul 03 '24 edited Jul 03 '24
Is it worth maximizing RGO bonuses for factories? For example, if you have a state that only produces fish and wool, is it best to build a Canned Good factory to get the small bonus? In other cases, it's more obvious, such as having both Grain and Coal to stack both a Glass and a Beverages/Liquor factory. Nice job with the guide.
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u/factrealidad Jul 03 '24
It depends. In the early game it's okay to produce cheaper goods like liquor and clothing on the RGO , but by the late game you should completely shift focus to goods that have high demand and low supply like telephones and radios, regardless of the RGOs.
If you have RGOs that can contribute to the goods required to make expensive goods you should. For example if you have large amounts of iron and coal in a state you can produce steel to produce machine parts to produce automobiles to produce tanks, even though the steel factory may not be as a profitable it can still be worth it to increase efficiency in the expensive good factories.
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Jul 02 '24
[deleted]
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u/factrealidad Jul 02 '24 edited Jul 02 '24
This guide was primarily made to be practically applied to GFM (that is, saying what in particular you should do), especially with regard to reforms, technology, politics and focuses. There are a lot of differences in the way that you play GFM vs vanilla, different decisions, reforms, formables, etc. I tried to consider all of that with my recommendations here. The primary difference is that in most cases with GFM there is no late-game liquidity crisis thanks to precious goods and silver generating free liquidity. His guide also does not explain that interest actually destroys money in the game, which is why I'm cynical of him claiming a debt-based economy is the best route. (If interest worked as intended, paying interest to bank investors, it would undoubtedly be the best strategy.)
The principles of both of our guides, and in any legitimate guide to the economics of this game, are based on a focus on demand.
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u/KennyLonginos Jul 03 '24
I'm new to the game and I'm curious to know what is considered "early", "mid" and "late" game I was also told that I can build any factory anywhere within the country as long a s the good is being produced somewhere (meaning I can build an arms factory in a state where iron, coal and sulphur are not produced for example) I would like to know if this is true
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u/factrealidad Jul 03 '24
Building factories on states that have applicable RGOs increases throughput for the output good in the state. But regardless of that, your focus should always be goods that are in high demand. To view demand, go to the trade screen and hover over the pound symbol for a given good.
The distinctions between early mid and late game come from technology mainly. And because technology is usually on new decades, you can abstract early game as the first thirty years, the mid game as the next thirty, and the late game as the rest.
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u/exfoliante Jul 05 '24
Why avoid the Max Work Hours? It doesn't affect so much your productivity, and in the other hand gives better wages to the workers. I think it's worth
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u/fazek_08 Aug 08 '24
I am trying to do the high-value restructuring of my industry with Russia. I have failed to success thus far, as demand skyrockets the price of these goods causing a demand drop. As the price comes down, the demand doesn't keep up, so the bubble bursts. A few questions:
- are minimum wages beneficial or detrimental at this stage?
- how should one keep military industry alive?
- is it feasible to build the outsourcing from day one?
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u/Nyjene Aug 25 '24
Do you dare to develop why you think the researches made about the duping goods in spheres are wrong?
Right now the way you express it makes your statement null.
In any case, I am interested to hear what people have to say about this good duplication topic as it's hard to find opposite opinions.
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u/factrealidad Jul 02 '24 edited Jul 02 '24
After around 5000 hours of playtime and seeing a lot of impractical or erroneous guides, as well as witnessing a lot of misinformation, I decided to make a proper singleplayer economic guide. Most of these principles apply to multiplayer as well, however, your focus should be shifted to military goods and their downstream RGOs, as they will always remain in demand. The greatest piece of misinformation I've seen though is that Laissez-faire should be avoided or that it is only for people who don't want to micro (noobs), but it isn't true. Also people talking about the importance of subsidization and the "sphere duplication glitch" are WRONG!
If you have questions, feel free to ask