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Actually I left a very bad review, almost deleted the game, but gave it some more chances and learned its mechanics. Changed my opinion a lot. Still could have been so much better, but actually there's a lot of work and thought put into this game. Hopefully they will keep on working cause there a lot of potential.
Basically, the AI will look only at the "predicted earnings" stat, but will ignore all other factors like the avalaible workforce, local input capacity, etc. I've had the AI build factories in places where the total population wasn't sufficient to staff even a single one.
I am not even a Paradox fan. Only game of them I played was Victoria 2 and now V3, exactly because V2. Also I left a bad review, because V3 should have been something else, especially the warfare is a big fail. But why should you care where and what AI builds? Those investment funds will sit for nothing anyway, you don't have access to them. In my first play I went way beyond 1936 and the investment fund was over 500 millions, so AI builds tens of things at a time, and still more money comes into the fund than out. I think AI only stops building when there's no infrastructure or something like that.
For example, when I played a Japan, the AI kept building stuff on Sachalin, especially food processing plants. Except that the isle is barely populated and you can't even build grain farms there. But for a staffing of 0.5% working off of the subsistence farms, the productivity will be good.
So the real reason is the construction points that the privates take? I agree, made me angry at first too, but now I think I know how to manage the economy to have enough construction sectors and points, so it isn't such a big of a deal anymore. Also when you started, you could have disable the private construction, so you use the investment pool funds yourself, but depending on the economic system. If you have laissez faire, those funds are for industry, if it's agrarianism, the funds are not for industry, but for farms etc.
Yes, I now have disabled the private construction altogether, and it's much smoother this way. The AI is far too linear and simplified in its approach. It wasn't programmed to account for MAPI, local resource availability, economy-of-scale effects or just the local workforce numbers. Probalby yet another mechanic which was cut short for the early release.
I think this game makes much more sense that we give it credit for. It's just a bit too complicated and still needs a lot of things added and improved, but still there's something solid in there.
Well, if this was a beta, then I would understand the shortcomings. But, it was released as a "complete" game more than a year ago.