I will concur. You can't really "fight your way up." Well, it is very, very difficult. I started as Ireland, and was able to, at best, field one corps with 20-30,000 troops, anchored by a division armed with M3's built under contract from the U.S. It took until 1943 before Ireland had 20 production.
We did some freakishly interesting campaigning. When the Netherlands decided to liberate itself in 1941-1942, the Irish were fighting alongside them until Italy entered the war and put a kibosh on thoughts of a Dutch seizure of Paris *and* Berlin. (They almost did it!)
Then we headed off to North Africa and helped conquer Libya from the Italians, side-by-side with the Iraqis.
Lastly, we headed to Sardinia and took that, and, strangely unopposed -- Sicily! But then suddenly 60,000+ Axis troops showed up, and the entire Irish army, isolated at Messina, melted in a week.
I ended that game there. It was my "training wheels" game. A couple of observations:
* If you want to build factories, you will not be building units.
* If you want to develop technology, you really need to focus on education, education, education to get the leadership up to semi-useful 3.0+.
* By 1943, I still had not even gotten to mechanized infantry, so I think all my development in the cavalry tree was a waste. I probably should have developed more air and naval technologies.
By 1943, Germany had taken all of the U.S.S.R. up through the Urals. It also took out an Allied Finland, Sweden, Norway, France, Netherlands (twice!), Belgium, Luxembourg (twice!), and most of China in the Pacific. They also had taken Malta in the Mediterranean.
The Allies had conquered Italian East Africa, Libya, Portugal (who had declared themselves Axis), and my small Italian conquests, however temporary those were going to be.
The game is incredibly slow-paced as a small country. You wait for a long time, even on "fast" speed, to get even a single tech development or a unit produced. Armor was 1941, based on the U.S. agreement. I didn't get any aircraft until 1942. My first home-built armored cars were some time in 1943. Then again I think I spent way too much time simply getting tech improvements and more factories. But whew! I was glad to have 20 by 1943. I don't think I was going to build any more until game end.