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by The Federal Republic of Vivolkha. . 102 reads.

How to improve your nation's Economy

NOTE: this is a slightly updated repost of a guide I wrote in 10000 Islands's forums.

How do I improve my Economy? This might be one of the most frequently asked questions by new players of NationStates (behind "Can you go to war with other nations?").

Because of the way NationStates calculates stats upon creating your nation, it is fundamentally impossible to start your nation with a(n almost) perfect Economy. I have not researched this in detail, but personally the highest starting Economy I got during unrelated tests was slightly above 80. Regardless, it is clear to me that the imperfect economies of new nations is fully intentional. No matter what you do, you will have to grow your Economy for it to become particularly powerful.

Depending on your choices during the create-a-nation questionnaire, your starting Economy value may range from 1 to ~80. I will cover this in more detail below.

Essentially, there are two main, independent ways to improve the Economy stat. They are both related to two other NS stats: Economic Freedom and Business Subsidization. Economic Freedom and Business Subsidization are almost completely independent from one another, allowing you to freely choose which path to take to improve your Economy or to combine both at will.

Economic Freedom
As one of 3 NationStates' Freedoms, Economic Freedom is a very important stat. For one, it partially determines your WA classification, as explained in this wonderful Dispatch here (not an official 10000 Islands Dispatch). But Economic Freedom is directly related to your Economy as well. The more Economic Freedom, the better your Economy stat, conversely, reducing your Economic Freedom will harm your Economy.

Just as you would expect, Economic Freedom is related to the amount of freedom businesses have to operate, as well as the freedom of individual citizens to take part in economic activity any way they desire. To improve Economic Freedom, you should support big businesses, enterpreneurs, and fair competition (so allowing business monopolies will actually lower Economic Freedom). In particular, CEOs tend to suggest options that improve Economic Freedom.

Economy-wise, nations in NationStates are divided in two large groups: Capitalist nations and Socialist nations. Mechanically speaking, the only difference between the two types is that Socialist nations have an artificial -100 added to their Economic Freedom. Hence, Capitalist nations have an Economic Freedom between 0 and 100, and Socialist nations have an Economic Freedom in the range of -100 to 0. This extra -100 is not considered when calculating other stats, as far as I know.

The above implies that the type of nation you are running, Capitalist or Socialist, is actually irrelevant when trying to improve your Economy. A Capitalist nation with an Economic Freedom of 50 is functionally identical to a Socialist nation with an Economic Freedom of -50. A Capitalist nation with an Economic Freedom of 25 is functionally identical to a Socialist nation with an Economic Freedom of -75. And so on.

At least two stats (other than Economy itself) depend prominently on Economic Freedom: Wealth Gaps and Crime. Essentially, more Economic Freedom implies larger Wealth Gaps and a higher Crime rate. The latter is very easy to address, but the former is not (without reducing Economic Freedom). Take this into account to decide how much Economic Freedom you want in your nation.

A little known fact is that Economic Freedom begins to hurt your Economy when it is extremely high. The exact threshold value is 80.00 for capitalist nations, and thus -20.00 for socialist nations. These are the optimal Economic Freedom values that guarantee the highest Economy (fun fact: starting with Capitalist or Libertarian freedoms guarantees that your nation will start at the optimal 80.00 Economic Freedom).

Finally, Economic Freedom largely determines your initial Economy value. Your starting Economic Freedom will range from -99 to 97. Except for very high Economic Freedoms (i.e. past the point where Economic Freedom begins to reduce Economy), the following formulas serve as a good rule of thumb:

Economy = Economic Freedom (if your nation is Capitalist)
Economy = Economic Freedom + 100 (if your nation is Socialist, per the above equivalence rule)

This only holds true if you don't answer any questions in the create-a-nation questionnaire, and only for a nation's first few days. Once you start answering issues, your nation will quickly deviate from these formulas.

Business Subsidization
Business Subsidization is a generally more overlooked stat than Economic Freedom and has a more complex behaviour. Most importantly, it has a more dramatic effect on the Economy than Economic Freedom.

Essentially, Business Subsidization measures the value of subsidies given to your nation's industries. Options that boost Business Subsidization often mention explicitly giving subsidies or money to a particular economic sector.

The effect of Business Subsidization is more complicated than that of Economic Freedom. For one, because it requires a certain level of Business Subsidization before the Economy begins to grow. This means that you will probably need to answer a few issues in a pro-subsidy manner before noticing any effect on the Economy whatsoever. However, the Economy boost it ends up giving is much more substantial than Economic Freedom, which will result in your Economy growing faster.

You can consider Business Subsidization as extra "bonus Economy points", as follows:

Economy = Effect of Economic Freedom + Bonus Points (minimum 0) + Other effects

Why? Because reducing Business Subsidization does not always harm your Economy. It only reduces your Economy if you had any such "bonus points". Reducing the Business Subsidization that was responsible for these "bonus points" will logically remove them and subsequently lower your Economy stat. This also means that, if you had a large number of "bonus points" (as most socialist-oriented nations are), reducing Business Subsidization can be catastrophic.

A stat (other than Economy) that depends on Business Subsidization is Taxation (after all, this money needs to come from somewhere!), and as such Freedom from Taxation and Disposable Income will be affected too. The more subsidies you give, the more Taxation will rise, and the more Freedom From Taxation and Disposable Income will be reduced. Taxation can grow to ridiculous levels and it is hard to keep down, so take it into account before beginning to subsidize anything in sight.

More Business Subsidization never has a negative effect on Economy.

Growth Thresholds
There is a pretty abrupt and noticeable threshold once your Economy hits a value of 96. Past this value, it becomes very stable and it is difficult to improve or harm further. This applies as long as your Economy is above 96, independently of your nation's other stats. A second threshold with even more extreme stability occurs when your Economy hits a value of 100.

Final comments
Some issues improve Business Subsidization while reducing Economic Freedom, and vice versa. In such case, both effects will partially cancel each other out, with Economy moving according to the result. For example, if the Business Subsidization boost grows your Economy by 2 while the Economic Freedom reduction decreases your Economy by 1, the result of the issue is that Economy will grow by 1.

For flavor reasons, Economic Freedom is generally preferred for Capitalist nations and Business Subsidization for Socialist nations. Per the equivalence rule, both work equally well for either type of nation.

RawReport