One of the main competitions between both superpowers during the Cold War was economy. The Soviet Union based on planned economy and USA believes in energy of capitalism in private sector. Both economical models are presented in the game.
You, as leader of your superpower, in cooperation with your parliament will be able to steer and invest money from national fund ( collected from incomes ) into either private or nationalized ( planned ) sector to increase GDP. As more money you have in private or nationalized sector as more you can build and produce.
You have a choice to manage which economic sector you want to use when you need to produce military.
When you start your production, the amount of it is deducted from this economic sector which is oriented on civilian production. It decreases general GDP. As more you produce = less GDP = less income for national finance fund. The idea is simple – collect to invest for bigger income in the future or spend to produce now. ( P.S. By the way, Arms Race – TCWE has this basic budget system implemented in the game ).
And the difference is how both economic sectors react on production. It has its own pros and cons.
Planned economy is cost efficient. Government controls this economic sector and it is oriented on getting the final production as soon as it’s ordered. You want it – you get it. Government has already paid for everything in the production chain to get the final product including resources, factories, maintenance, workforce, logistics etc. Once product is produced the production cost/value goes back to civilian production to increase GDP.
In private sector it works differently. Private production chains involve private small, medium and large businesses and sub contractors. Every business works for profit which makes the final product expensive compare to nationalized production. If you would order production in nationalized sector it cost you, let’s say 50. The same production and amount in private sector will cost you 100. The good side of private sector it grows by it self without direct government control. And nationalized sector doesn’t grow without direct government investments from nationalized finance fund. More you order in private sector it grows faster and businesses becomes richer. This is very good for national GDP in long terms.
What kind of economy you will feel better for your country?
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