The game's miscalculation of GDP and the side effects of it

[MatthewP]

It doesn't make perfect sense because that's not how GDP works. At this point it seems if I tell you the sky is blue you'll tell me it's really green.

It is how GDP works. If a country produces materials that all to go toward production of a X units of a final product their GDP is the same as another country that produces X final products but imported the materials. That's just how GDP works because otherwise it doesn't make any mathematical sense since the same thing would get counted multiple times...which is what happens in the game,

Did you know net exports are added to GDP?

Yep.

 

[durbal]

Did you know net exports are added to GDP?

How is that relevant? Whether the final products are exported or consumed domestically doesn't matter...they're still added to the GDP total.

I'm not even sure of what your argument is. Are you trying to say that the game calculates GDP properly and the rest of the world does it wrong or something?

 

[MatthewP]

It is how GDP works. If a country produces materials that all to go toward production of a X units of a final product their GDP is the same as another country that produces X final products but imported the materials. That's just how GDP works because otherwise it doesn't make any mathematical sense since the same thing would get counted multiple times...which is what happens in the game,

Let’s say the value of final products is X and the value of the raw materials is M.

A Country calculates their GDP as follows:

value of final products consumed + net exports.

For the country that produces its own raw materials, this is X. It has no imports or exports.

For the country that imports its raw materials, this is X - M. This is because net exports means exports - imports. This country has 0 exports and M imports. Therefore -M is added to its GDP. This is the calculation I showed earlier. This is why net exports matter.

The reason it is done this way is that your method creates weird results. A nation that produces only raw materials and exports them would have a GDP of zero, for example.

I guess I’m also at a loss. If it seems like I’m contradicting everything you say believe me it’s not personal; you are just dead wrong about this.

 

[durbal]

For the country that imports its raw materials, this is X - M. This is because net exports means exports - imports. This country has 0 exports and M imports. Therefore -M is added to its GDP. This is the calculation I showed earlier. This is why net exports matter.

Ah, yeah. Regardless, long production chains shouldn't be adding the same value over and over. My example was bad since it only had one step, but if you had 10 steps using the same original concept you are still only subtracting the import once but adding its value at each step.

Also, I don't think the game calculates exports or imports in its GDP calculations.

 

[MatthewP]

Ah, yeah. Regardless, long production chains shouldn't be adding the same value over and over. My example was bad since it only had one step, but if you had 10 steps using the same original concept you are still only subtracting the import once but adding its value at each step.

The number of steps won’t change anything. Whatever value is added by the first 9 steps is the amount that needs to be imported by a nation that just does the last step. Assuming your 10 steps add equal value you’ll end up with a much larger real GDP disparity than in your two step example. For the same example, the game’s version of GDP will show a disparity in the same direction but smaller, because the nation with only one factory has focused on final products and the game’s calculation favors that approach. Put an example together, include import value, and you’ll see.

Also, I don't think the game calculates exports or imports in its GDP calculations.

True. The game doesn’t factor in input costs no matter the source of the input.

 

[agaabrieel]

I think using the income approach to GDP should work as well.

 

[GAGA Extrem]

GagaExtreme mentioned this approach as well. What I discovered, though, is that blanket subsidies on railroads really becomes a drag after awhile. Plenty of railroads are profitable. But it's those weird ones in the mid-game that can't decide how to be profitable. Those get subsidies if they are behaving in a way I don't like.

I am a bit late (just saw your post now), but anyway:

Mid game Railroads are imho a very interesting thing, because you could argue they are one of the spots where economic fine tuning between taxation, development and consumer goods kicks in.

My understanding is that the mid game Railroad subsidies have five major aspects to them:
(1) Lack of demand for Transportation due to low number of Mines, Plantations and Urban Centers with related PMs.
(2) Lack of demand for Transportation due to high taxes and/or expensive consumer goods, which prevents pops from being pushed past the SOL threshold (20, iirc?) that activates Transportation as a pop need.
(3) Expensive input goods for Railways due to underproduction from improper economic development or improper PM use (or country resource limitations in some rare cases).
(4) Low INFRA & Transportation production efficiency due to lack of advanced technologies (Electric Railways is imho one of the most important early-to-mid game techs).
(5) Excessive INFRA demand from an overbuild industry that consumes INFRA while not being staffed due to lack of employable population pr profitability.

I actually wish there were more bits of the economy like this, because it really forces you to think a bit about how you want to develop your country. Depending on my average SOL I tend to ease up a bit on taxes (either going down 1 step or by abolishing some consumer taxes) in the mid game these days, simply because it seems that the combined impact from higher demand (Services and Transportation in particular), lower Railway subsidies and more investment pool income will off-set that forfeited extra tax income.

 

[Cymsdale]

(1) Lack of demand for Transportation due to low number of Mines, Plantations and Urban Centers with related PMs.

Pet-peeve, Cargo Prioritization is worst production method for moving cargo.

 

[GAGA Extrem]

Basic cargo transportation (between states) is abstracted as INFRA.

I assume the Transportation related PMs are more supposed to be on-site or short-range (intra-state) transport duties.

 

[Cymsdale]

Basic cargo transportation (between states) is abstracted as INFRA.

I assume the Transportation related PMs are more supposed to be on-site or short-range (intra-state) transport duties.

I get it, but the fact remains that if you have a high transportation demand that's preventing you from using transportation-related PMs, then the way to fix that is to change some railroads to passenger focus, which is just weird.

 

[SchwarzKatze]

I don't know why people started talking about imports and exports. In Victoria 3, all produced goods will get bought, so import and export don't matter. The problem is that the game is calculating revenues of all buildings instead of values added by them

 

[GrafKeks]

I don't know why people started talking about imports and exports. In Victoria 3, all produced goods will get bought, so import and export don't matter.

So if let's say unsold goods were added to inventory, then it'd be different?

Import and Export matter whenever they change the price for the goods involved in the trade in either market anyway.

 

[EwaldvonKleist]

+1 OP, please fix GDP calculation. It can massively misrepresent an economy's size in its current form.