National Goals: GDP
Day 747, 15:04
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Published in Netherlands 
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by
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by Boklevski
National Goals: GDP
Well, I don’t need to write any Financial Reports anymore, so I’ll write something else. It has become way bigger, and cost way more time than expected, but I had fun in doing it.
If you do not like detailed explanations and theories, do yourself a favor. Read the introduction, then go back to the index, and click on the “National Goals: How to achieve growth?” Skip the rest. You’ll thank me for it later.
Introduction
GDP: Theory
GDP: From Theory to eRep
National Goals: How to achieve growth?
My Recommendations
Introduction
We have re-elected ThomasRED as our president again. There is one addition: with electing him, we have agreed to work together on the National Goals set by him.
We aim to have 1131 citizens at day 776, and to have all our regions we currently have on that day. Okay, that’s clear. However, we also aim for a GDP of 431 GOLD. And then the question could arise: what the heck is GDP? And how can we achieve growth? I know I had those questions, so I did some research which I would like to share with you in this article.
I’ll start of with some real life theory to get an understanding. Then I make the link to eRepublik. Skip both topics if you don’t care! I did look into the theory, as I love how the game tries to reflect real life theories. I don’t care it epically fails in doing so, but we can use it for the financial stuff. Saying again: real life theories do not (always) work in eRepublik, I am referring to them to get an understanding… good… glad we have cleared that up now.
”I’m sorry you don’t, Boklevski, but I have a life. Skip the theory.”
GDP: Theory
Starting of with the definition of GDP, or Gross Domestic Product:
“The gross domestic product (GDP) or gross domestic income (GDI) is a basic measure of a country's overall economic performance. It is the market value of all final goods and services made within the borders of a country in a year.”
At least it’s a start. Thank you, Wikipedia. There are three ways to calculate the GDP. One is the expenditure method, which is also used in eRepublik. I’ll focus on that, and not bother you with the other two:
GDP = private consumption + gross investment + government spending + (exports – imports)
It’s called the expenditure method, as it looks from the people spending the money. So in words, it is everything you or the government buys internally, any investment you make, and everything that is bought by foreigners (from your country’s companies), minus spendings you make for products that are bought at foreign companies. (Even though you spend it, the latter belong to the country’s GDP of that foreign company, so it is not counted towards “your” GDP.)
GDP: From Theory to eRep
In eRepublik, we can make that formula a bit more easy: both the government and the citizens buy from companies (hospitals are bought from a company, and State Companies are considered companies by the game; so no exception there). So the private consumption and government spending can be one number: all goods bought at eUNL companies.
Gross investments are a bit more difficult. You can do three investment in eRepublik: creating a company (20 GOLD), invest in a license (20 GOLD), or upgrade to a higher quality (varies).
The exports and imports are more easy again: we can leave it out. There are no complex structures in offering products physically at other markets. You select it just in your company, therefore it’s counted towards “consumption” of the country the company belongs to. If a product is sold in another country, it automatically is added as profit in the eUNL company. Buying goods at foreign companies is similar: although you can find it on the eUNL marketplace, it is counted immediately to the GDP of the other country. So for the formula, we don’t have to take it into account, but I’ll get back to it later in my recommendations.
So if we update the formula, we get the following:
GDP = private consumption + gross investment + government spending + (exports – imports) becomes GDP = goods bought at eUNL companies + 20 GOLD x created companies + 20 GOLD x purchased licences + GOLD spend for upgrades
Guess what? That matches the information on the eRep wiki. There we can also find how to calculate the value of “goods bought at eUNL companies” in GOL
goods bought at eUNL companies = sales x recommended exchange rate (RER).
eRep is not using the exchange rate, but Recommended Exchange Rate (RER). The RER is calculated by multiplying the Average Production Cost by 50 NLG.
EDIT: adi.furk commented that the RER is now calculated by multiplying the APC with 10, resulting in less high values.
The APC means summing up for all products: the price of a single product, divided by the units for that product (needed labour and raws). You see it in a company: there is an unfinished product in a company with for example 1.95 / 5. That means that 1.95 units out of 5 units has been completed, so one product consist of 5 units. That “5 units” is what the RER formula refers to.
We can’t manually sum all those costs, but the RER can be found at http://www.erepublik.com/en/exchange#buy_currencies=62;sell_currencies=31;page=1 (Monetary Market): 1 G = 166.40 NLG. So apparently, the APC is 166.40 NLG / 50 NLG = 3.328. Two remarks: First, I think the formula is not working. (The APC is good, but the RER doesn’t make any sense.) Second, although it doesn’t work, it’s used to calculate the GDP, so we have to use it anyway. Hey, I told you eRep sometimes epically fails at formulas?!
Summarizing the calculation:
GDP = SUM (price sold products / unit of products) x 50 NLG x sales + GOLD for upgrades + GOLD for creating company x created companies + GOLD for license x purchased licenses
There are a few things fixed in this calculation. Creating a company costs 20 GOLD, the unit of products is fixed by the game, etc. If we want to achieve growth in the GDP, we’ll need to focus on the variables. I’ve made them bold.
National Goals: How to achieve growth?
If you have skipped the theory: wise choice. If you had the patience to read everything above – thanks! – you’ll agree to the following:
The variables we can change to gain growth are:
- Higher prices for products
- Sell more products
- Upgrade companies
- Create companies
- Purchase licenses
Higher prices for products can only be achieved when demand is higher. Two ways to improve this is to have enough training wars, and to attract more citizens. This will lead to increased demand, and thus higher prices. However, if citizens don’t have more money, they can’t pay more. So either wages have to be increased or income taxes cut down. More citizens not only lead to higher prices, but also lead to more sales and even opens up more opportunities for (new) companies.
If there is one thing bad, it’s having sales that are not considered sales: the black market. This is a good way to avoid taxes. However, if someone buys from the black market, the seller has bought it from the company first for a very low price to avoid taxes. This low price seriously hurts the GDP. This will be very hard to counter, although there is one “black market” we can act upon: state companies. At all times, state companies should sell their raws and products to other governmental organizations (state companies, defense, …) at a market confirm price and directly on the marketplace. Taxes go to the state anyway, so no money is lost bottomline. Selling at market confirm (or higher) prices even boosts the GDP, although we should watch not to artificially improve the GDP by doing so. Also, selling a hospital from state companies to the state for a symbolic price is BAD. It’s even almost criminal. Taxes and profit go to the state anyway, so why not selling at a normal price, to make it count towards the GDP?
If we want to sell more products, or country will probably be too small. We should export our products. However, licenses are quite expensive: 20 GOLD. It can still be beneficial (even when a country has a huge import tax!), as some countries are just plain expensive, and we are relatively cheap (especially with current rates). However, the extra profit that can be made is not that large to justify investing 20 GOLD. Perhaps the government can subsidize export licenses. This will bolster the GDP in two ways: more products are sold, and more licenses are bought; both directly counting towards GDP.
There is something every citizen can do. When you buy products, check if the company is really eUNL. You can do this by clicking the company’s name on the marketplace, and checking which country it is in. Buying from foreign companies gets them a higher GDP, but buying from our own benefits ours. Which one do you want to sponsor?
Lastly, we can try to upgrade as much companies as possible. This will require one very important thing: demand for goods with a higher quality. Benefits will be big: stronger and healthier citizens through better weapons, food, houses, etc… plus, ofcourse, a higher GDP. The government can train/teach the advantages of buying better quality products.
My Recommendations
So to summarize, based on above, my recommendations are:
- Attract more citizens
- Have enough training wars
- Lower income tax or increase wages
- Do everything to avoid the use of the black market
- Sell state company products at market conform prices to other state organizations
- Open up possibilities for export (subsidize licenses)
- Check if the selling company is eUNL
- Encourage use of high quality goods
Although GDP seems to be financially only, solutions would have to be implemented not only by Finance, but also by State Companies, Raws, Recruitment & Coaching, etc.
Note that some will be easier to obtain than others, and we should focus on “quick wins”. If we focus a bit on all suggestions, we’ll have a bit impact on them. If we focus on two or three, the impact on them will be big, even although others will not improve.
Which two or three to choose? I’ll leave that up to our president to agree with government. After all, he has chosen our National Goals, I’m just doing some research.
Thanks for reading!
Kind regards,
Your Financially Addicted Fellow-Citizen,
Boklevski
Well, I don’t need to write any Financial Reports anymore, so I’ll write something else. It has become way bigger, and cost way more time than expected, but I had fun in doing it.
If you do not like detailed explanations and theories, do yourself a favor. Read the introduction, then go back to the index, and click on the “National Goals: How to achieve growth?” Skip the rest. You’ll thank me for it later.
Introduction
GDP: Theory
GDP: From Theory to eRep
National Goals: How to achieve growth?
My Recommendations
Introduction
We have re-elected ThomasRED as our president again. There is one addition: with electing him, we have agreed to work together on the National Goals set by him.
We aim to have 1131 citizens at day 776, and to have all our regions we currently have on that day. Okay, that’s clear. However, we also aim for a GDP of 431 GOLD. And then the question could arise: what the heck is GDP? And how can we achieve growth? I know I had those questions, so I did some research which I would like to share with you in this article.
I’ll start of with some real life theory to get an understanding. Then I make the link to eRepublik. Skip both topics if you don’t care! I did look into the theory, as I love how the game tries to reflect real life theories. I don’t care it epically fails in doing so, but we can use it for the financial stuff. Saying again: real life theories do not (always) work in eRepublik, I am referring to them to get an understanding… good… glad we have cleared that up now.
”I’m sorry you don’t, Boklevski, but I have a life. Skip the theory.”
GDP: Theory
Starting of with the definition of GDP, or Gross Domestic Product:
“The gross domestic product (GDP) or gross domestic income (GDI) is a basic measure of a country's overall economic performance. It is the market value of all final goods and services made within the borders of a country in a year.”
At least it’s a start. Thank you, Wikipedia. There are three ways to calculate the GDP. One is the expenditure method, which is also used in eRepublik. I’ll focus on that, and not bother you with the other two:
GDP = private consumption + gross investment + government spending + (exports – imports)
It’s called the expenditure method, as it looks from the people spending the money. So in words, it is everything you or the government buys internally, any investment you make, and everything that is bought by foreigners (from your country’s companies), minus spendings you make for products that are bought at foreign companies. (Even though you spend it, the latter belong to the country’s GDP of that foreign company, so it is not counted towards “your” GDP.)
GDP: From Theory to eRep
In eRepublik, we can make that formula a bit more easy: both the government and the citizens buy from companies (hospitals are bought from a company, and State Companies are considered companies by the game; so no exception there). So the private consumption and government spending can be one number: all goods bought at eUNL companies.
Gross investments are a bit more difficult. You can do three investment in eRepublik: creating a company (20 GOLD), invest in a license (20 GOLD), or upgrade to a higher quality (varies).
The exports and imports are more easy again: we can leave it out. There are no complex structures in offering products physically at other markets. You select it just in your company, therefore it’s counted towards “consumption” of the country the company belongs to. If a product is sold in another country, it automatically is added as profit in the eUNL company. Buying goods at foreign companies is similar: although you can find it on the eUNL marketplace, it is counted immediately to the GDP of the other country. So for the formula, we don’t have to take it into account, but I’ll get back to it later in my recommendations.
So if we update the formula, we get the following:
GDP = private consumption + gross investment + government spending + (exports – imports) becomes GDP = goods bought at eUNL companies + 20 GOLD x created companies + 20 GOLD x purchased licences + GOLD spend for upgrades
Guess what? That matches the information on the eRep wiki. There we can also find how to calculate the value of “goods bought at eUNL companies” in GOL
😨
goods bought at eUNL companies = sales x recommended exchange rate (RER).
eRep is not using the exchange rate, but Recommended Exchange Rate (RER). The RER is calculated by multiplying the Average Production Cost by 50 NLG.
EDIT: adi.furk commented that the RER is now calculated by multiplying the APC with 10, resulting in less high values.
The APC means summing up for all products: the price of a single product, divided by the units for that product (needed labour and raws). You see it in a company: there is an unfinished product in a company with for example 1.95 / 5. That means that 1.95 units out of 5 units has been completed, so one product consist of 5 units. That “5 units” is what the RER formula refers to.
We can’t manually sum all those costs, but the RER can be found at http://www.erepublik.com/en/exchange#buy_currencies=62;sell_currencies=31;page=1 (Monetary Market): 1 G = 166.40 NLG. So apparently, the APC is 166.40 NLG / 50 NLG = 3.328. Two remarks: First, I think the formula is not working. (The APC is good, but the RER doesn’t make any sense.) Second, although it doesn’t work, it’s used to calculate the GDP, so we have to use it anyway. Hey, I told you eRep sometimes epically fails at formulas?!
Summarizing the calculation:
GDP = SUM (price sold products / unit of products) x 50 NLG x sales + GOLD for upgrades + GOLD for creating company x created companies + GOLD for license x purchased licenses
There are a few things fixed in this calculation. Creating a company costs 20 GOLD, the unit of products is fixed by the game, etc. If we want to achieve growth in the GDP, we’ll need to focus on the variables. I’ve made them bold.
National Goals: How to achieve growth?
If you have skipped the theory: wise choice. If you had the patience to read everything above – thanks! – you’ll agree to the following:
The variables we can change to gain growth are:
- Higher prices for products
- Sell more products
- Upgrade companies
- Create companies
- Purchase licenses
Higher prices for products can only be achieved when demand is higher. Two ways to improve this is to have enough training wars, and to attract more citizens. This will lead to increased demand, and thus higher prices. However, if citizens don’t have more money, they can’t pay more. So either wages have to be increased or income taxes cut down. More citizens not only lead to higher prices, but also lead to more sales and even opens up more opportunities for (new) companies.
If there is one thing bad, it’s having sales that are not considered sales: the black market. This is a good way to avoid taxes. However, if someone buys from the black market, the seller has bought it from the company first for a very low price to avoid taxes. This low price seriously hurts the GDP. This will be very hard to counter, although there is one “black market” we can act upon: state companies. At all times, state companies should sell their raws and products to other governmental organizations (state companies, defense, …) at a market confirm price and directly on the marketplace. Taxes go to the state anyway, so no money is lost bottomline. Selling at market confirm (or higher) prices even boosts the GDP, although we should watch not to artificially improve the GDP by doing so. Also, selling a hospital from state companies to the state for a symbolic price is BAD. It’s even almost criminal. Taxes and profit go to the state anyway, so why not selling at a normal price, to make it count towards the GDP?
If we want to sell more products, or country will probably be too small. We should export our products. However, licenses are quite expensive: 20 GOLD. It can still be beneficial (even when a country has a huge import tax!), as some countries are just plain expensive, and we are relatively cheap (especially with current rates). However, the extra profit that can be made is not that large to justify investing 20 GOLD. Perhaps the government can subsidize export licenses. This will bolster the GDP in two ways: more products are sold, and more licenses are bought; both directly counting towards GDP.
There is something every citizen can do. When you buy products, check if the company is really eUNL. You can do this by clicking the company’s name on the marketplace, and checking which country it is in. Buying from foreign companies gets them a higher GDP, but buying from our own benefits ours. Which one do you want to sponsor?
Lastly, we can try to upgrade as much companies as possible. This will require one very important thing: demand for goods with a higher quality. Benefits will be big: stronger and healthier citizens through better weapons, food, houses, etc… plus, ofcourse, a higher GDP. The government can train/teach the advantages of buying better quality products.
My Recommendations
So to summarize, based on above, my recommendations are:
- Attract more citizens
- Have enough training wars
- Lower income tax or increase wages
- Do everything to avoid the use of the black market
- Sell state company products at market conform prices to other state organizations
- Open up possibilities for export (subsidize licenses)
- Check if the selling company is eUNL
- Encourage use of high quality goods
Although GDP seems to be financially only, solutions would have to be implemented not only by Finance, but also by State Companies, Raws, Recruitment & Coaching, etc.
Note that some will be easier to obtain than others, and we should focus on “quick wins”. If we focus a bit on all suggestions, we’ll have a bit impact on them. If we focus on two or three, the impact on them will be big, even although others will not improve.
Which two or three to choose? I’ll leave that up to our president to agree with government. After all, he has chosen our National Goals, I’m just doing some research.
Thanks for reading!
Kind regards,
Your Financially Addicted Fellow-Citizen,
Boklevski
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Comments
article gone now?
anyway i boosted up GDP by investing 200 gold in upgrading a weapon company to Q5 😉
Boklevski, a licence cost 20 gold... If the region of your company have been won by a other country in a war, then you can buy one licence for this country only at 5 gold...
Very nice article... Now i can understand what i have to do with GDP ;p
Yeah, had some troubles with the links, Luuklag... it's on now, though... and complete 😉
And thanks ThomasRED, will update 🙂
intresting 🙂
Interesting article, good that someone makes it clear 😛
It is clear, GDP in eRepublic does not say much on your economics. Just invest by upgrading and you grow. But in fact maybe there is no gain :/
hmmm, anyway it sounds like BP propaganda to me 😉
Trying to force the government to achieve the goals of the president, that isnt really part of the government... strange situation anyways...
Niemand,
Your statement that we can grow by just investing is true. However, to upgrade, you need GOLD. And to get GOLD, you need profits. So investments are a good measurement of economic performance, like the real life theory 😉 (Yeah, eRep messes this up a bit, as being elected or getting Hard Worker also gets you 5 GOLD, so that's also a measurement of economic growth?!)
Luuklag, I could write an article about my dog that got overrun by a huge red truck, and you would claim that it's BP propaganda 😛
By the way, read the EI article: the presidents goals, are OUR goals - that we need to achieve together... according to the eRep admins, that is 😛
Great analyze Boklevski, even the theory 😉
Boklevski to upgrade you need gold. Gold you can get from selling NLG, using your medals or buying gold for Euro's.
There are even an upgrade that does not give real profit (moving tickets companies & gifts).
Of course some investments can help in achieving a better economy.
But to get a more realistic GPD it should be measured the total sales made by the companies combined with the salaries paid. Of course in gold. Maybe the investments made & the medals earned by the population could be added too. But eRepublik makes the investments the GPD. That is silly I think.
Wicked article mate 😃
If the GDP is the goal in, and of, itself, then the government should just sell itself products at inflated prices.
That will increase money 'velocity' while doing nothing for profits. By my understanding, that will raise GDP. Won't do anyone any good, but it will raise the GDP...
awesome...
The RER is calculated by multiplying the Average Production Cost by 50 NLG -> NOT TRUE
The reality is that now it is multiplied by 10.
Notice that the current RER does not have the huge value it had in the past. http://www.erepublik.com/en/exchange" target="_blank">http://www.erepublik.com/en/exchange
@ adi.furk: thanks! I'll put your comment in the article to be complete