Can you explain foreign investment?

[Ilhan]

How does it benefit me to build factories in the UK as America?

[Ilhan]

my capitalists invest in British factories instead of mine right now.

[Kristoffer]

your market gain that resource/good they invest in and they gain wealth (into your investment pool) if that is profitable

[Kristoffer]

As America it is probably not gonna be that benefitial unless they invest in something you need. It also becomes less important later in the game what they invest in. It might be good for you that they invest abroad at some point in the game. I generally dislike it cus AI tend to not make the smart decitions and usually just do random decitions

[cdcdcd172]

It is politicly usefull for you to invest in nations you want to puppet or get into you powerblock. Your capitalists don care about that they search for the biggest divident. So make investment agreements with that in mind.

[cdcdcd172]

Originally posted by Kristoffer:

your market gain that resource/good they invest in and they gain wealth (into your investment pool) if that is profitable

That´s not true, factories always sell in the state they are in ownwership only changes where the dividents are going.

[VoiD]

You get money, and capitalists, they get to industrialize.

If you don't want to play the usual game of multiculturalism & imigration draw, or trying to conquer chinese provinces, you'll run out of population for your factories at some point, so you can keep "expanding" by developing other nations. You can also do so with a purpose, such as creating a treaty port and greatly expanding their production of a specific good you need so you can get it through trade, profiting twice, from dividends and the trade route, while making something you need cheaper in your country.

Not to mention you can use economic dependency as leverage for other diplomatic deals, like drawing people into your bloc then subjulgating them with one click as a sovereign empire. Or simply add them to a trade union to get full access to their, now developed market, as if it was your own.

Plus you can use it to develop your puppets or bloc members too.

tl;dr it opens up many possibilities, it depends on your goals

Edit: i'd be interested in seeing if I could play as something like china, develop another nation's opium plantations so much the price tanks, then lettimg them trade it with me on their own while I set tariffs to the max to see if I can make a ton of money from their trade AND the dividends from the farms.

[Mäx]

You don't benefit at all. The only upside is your capitalist saw a better deal in Britan. They are making a little more money and you get a tiny bit more taxes. This comes whith the downside that the recources from that buildings will stay in the british market. A huge loss. Foreign investment is good in certain cases. For example you dont have a key recource but your subject has it. They are automatically part of your market and you automatically have investment rights. You can just build there, get recources for your market and you or your capitalists get dividents. Your subject also becomes more economicaly dependent and is easier to control.

[Jason]

My take on it after a few days of play is that there are some cases where it is good...
Say you need lead but have none in your country but you have a puppet or someone in your market that does. You could build there. You get the dividends and the good go into your market. I would focus on building in my own country (and only allow my private sector to build in my own country) until we start getting low on pops or places to build. Then, if I have extra construction points and nowhere to build, I would look to smaller countries that have stuff I need and are in my market or that I can hopefully get them in my market with leverage. Also, by building in smaller countries, if they try to nationalize your buildings, you can smack them. I just can't see how allowing a much bigger country rights to build in yours, gaining leverage over you, is good.

[Wilhelm]

Originally posted by ilhanmete:

my capitalists invest in British factories instead of mine right now.

you get wealth and leverage. they invest where its profitable at the time of investment.
normally its better when they invest in your country or if its highly profitable ressources in others.

on the other hand other countries capitalists invest in your country, too.

[TasteDasRainbow]

If you need to import something you can't develop in your country, or if you have filled all your building slots for a resource that is highly profitable, i.e. building gold mines in other countries.

It will pretty much always be better to build in your own country because you don't just get dividends+tax, you also get the wages and tax from those, as well as those wages being spent in your market.

You pretty much never want to import unless you hit market shortage amounts of important goods, because it will be pulling money out of your economy, unless it's necessary strictly to refine into exports worth more.

[Vellsi]

Foreign investment mainly benefits you in three ways:

- One reason is wanting resources or manufactured goods out of that country you could not build up in your own country or would not want to waste your population on.

To give an example: Say you want rubber, oil or opium but don't have the navy to go conquer in Asia, nor the military to take on other Great Powers, so you could befriend a weak nation, get investment rights, build up in their lands to drain all their peasants into manufacturing and because you have good standing with the nation you could then import it all (as your trade route would be preferred over other foreign nation's trade routes due to relations). The price bump from importing large quantities further bumps up profitability of the buildings, which in return ends in your nation's pocket.


- Foreign investment increases economic dependency for Power Bloc reasons and in subjects.

An abstract example: If you want to get Power Bloc leverage you could be friends with a nation, build up profitable business in their country, supply the goods you manufacture yourself to their market, all of which makes them ever more economically dependent on you, making it easier to coerce them into your Power Bloc. The same goes with subjects but they share your market, so no manual trading is necessary.


- To hurt economic growth in the nation in the long run.

Most people are not aware that in the long run the wealth of the population will exceed your governmental wealth and spending capacity by significant margins. Think about it: You start with mostly peasants and uplift them over decades into a manufacturing economy. That allocates ever more financial potential into the hands of taxable and dividend gaining citizens. The taxable part you get to spend but the remaining dividends can go straight back into economic growth. As the stored wealth of a nation mostly consists of is its employed buildings and the derived revenues (both internally and from export) it's important to steer this wealth out of the pockets of business owners elsewhere and into more economic growth in your confines.

What you do by building in foreign nations is drain the wealth of their Pops into your Pops, which lets you compound at steeper rates in the future. Compounding rates are difficult to think in but it greatly matters in the long run.

This is best illustrated with an extreme example: A poor nation has mostly peasants in subsistence farming. They generate at best 1£ per peasant with very high taxes and land-based taxation. This determines the rate at which the government could ever consider building up construction for more buildings.

Now your aristocrats and capitalists enter their construction market, backed by huge amounts of construction in your country. They build up farms and resource buildings to drain all the peasants into taxable jobs. The taxes from the measly income the working Pops make will go to the nation (if they change tax law to per-capita taxation) but the excess profits from these buildings would go all to your Pops, not theirs.
Your Pops use this wealth to raise the standard of living in your country, which attracts more people to it, they also use it to build up more buildings in your country at some point (i.e. when technology and prices make it appealing).
This cycle is not possible for the country you invested in, so you will pull ever further ahead at their expense.

If you consider two fictional even countries in terms of population, political systems, resources and military capacity, the country who owns foreign investments would pull further and further ahead.


However, all of this of course only matters if the investment decisions of the AI are wise, which it isn't, where in return most issues and complaints stem from.

A major reason the AI construction and investment system gets so much flak right now is because the AI is fairly stupid and does not consider construction efficiency (especially penalties from turmoil). It only considers current building efficiency based on market demand, which can fluctuate from one moment to another. This leads to cases where the AI builds something taking forever in a conquered state or another nation that might then not even be profitable by the time it finishes.
What the developers urgently need to do is give the AI understanding of expected profit per time spend on construction by factoring these things in and minor weighting of long-term strategic resource availability - but until such an update goes live a lot of people will complain about the current system and find it rather frustrating in practice.

[AKUA]

Originally posted by Vellsi:

Foreign investment mainly benefits you in three ways:

- One reason is wanting resources or manufactured goods out of that country you could not build up in your own country or would not want to waste your population on.

To give an example: Say you want rubber, oil or opium but don't have the navy to go conquer in Asia, nor the military to take on other Great Powers, so you could befriend a weak nation, get investment rights, build up in their lands to drain all their peasants into manufacturing and because you have good standing with the nation you could then import it all (as your trade route would be preferred over other foreign nation's trade routes due to relations). The price bump from importing large quantities further bumps up profitability of the buildings, which in return ends in your nation's pocket.


- Foreign investment increases economic dependency for Power Bloc reasons and in subjects.

An abstract example: If you want to get Power Bloc leverage you could be friends with a nation, build up profitable business in their country, supply the goods you manufacture yourself to their market, all of which makes them ever more economically dependent on you, making it easier to coerce them into your Power Bloc. The same goes with subjects but they share your market, so no manual trading is necessary.


- To hurt economic growth in the nation in the long run.

Most people are not aware that in the long run the wealth of the population will exceed your governmental wealth and spending capacity by significant margins. Think about it: You start with mostly peasants and uplift them over decades into a manufacturing economy. That allocates ever more financial potential into the hands of taxable and dividend gaining citizens. The taxable part you get to spend but the remaining dividends can go straight back into economic growth. As the stored wealth of a nation mostly consists of is its employed buildings and the derived revenues (both internally and from export) it's important to steer this wealth out of the pockets of business owners elsewhere and into more economic growth in your confines.

What you do by building in foreign nations is drain the wealth of their Pops into your Pops, which lets you compound at steeper rates in the future. Compounding rates are difficult to think in but it greatly matters in the long run.

This is best illustrated with an extreme example: A poor nation has mostly peasants in subsistence farming. They generate at best 1£ per peasant with very high taxes and land-based taxation. This determines the rate at which the government could ever consider building up construction for more buildings.

Now your aristocrats and capitalists enter their construction market, backed by huge amounts of construction in your country. They build up farms and resource buildings to drain all the peasants into taxable jobs. The taxes from the measly income the working Pops make will go to the nation (if they change tax law to per-capita taxation) but the excess profits from these buildings would go all to your Pops, not theirs.
Your Pops use this wealth to raise the standard of living in your country, which attracts more people to it, they also use it to build up more buildings in your country at some point (i.e. when technology and prices make it appealing).
This cycle is not possible for the country you invested in, so you will pull ever further ahead at their expense.

If you consider two fictional even countries in terms of population, political systems, resources and military capacity, the country who owns foreign investments would pull further and further ahead.


However, all of this of course only matters if the investment decisions of the AI are wise, which it isn't, where in return most issues and complaints stem from.

A major reason the AI construction and investment system gets so much flak right now is because the AI is fairly stupid and does not consider construction efficiency (especially penalties from turmoil). It only considers current building efficiency based on market demand, which can fluctuate from one moment to another. This leads to cases where the AI builds something taking forever in a conquered state or another nation that might then not even be profitable by the time it finishes.
What the developers urgently need to do is give the AI understanding of expected profit per time spend on construction by factoring these things in and minor weighting of long-term strategic resource availability - but until such an update goes live a lot of people will complain about the current system and find it rather frustrating in practice.

I think it also depends on the country you invest. If the target country has more population and lands than yours. Then it is you the investor at a weak position as the target country can just seize your properties and empty your GDP. i saw a HRE run on reddit where the player decided to nationalized all industries owned by Sweden then Sweden GDP went to zero. So it follows a death spiral of revolutions in Sweden.

By the way, guess it will take a while for them to fix AI. There are so many things that need to be prioritized. However, they need to address it at some point if they want to keep this game alive for next 6-8 years.

[HeavyRittles]

I'm just glad they started to implement it finally. It was really stupid being unable to do imperialism without direct conquest & annexation. Gotta have that rubber.

[SolGuardian]

Originally posted by HeavyRittles:

I'm just glad they started to implement it finally. It was really stupid being unable to do imperialism without direct conquest & annexation. Gotta have that rubber.

You don't get the goods from the investments, if you have a colonial nation or puppet than those goods are in your market.

[HeavyRittles]

I know. It was the fact that a good would be unavailable worldwide even from trade because all the Indonesian minors or whoever couldn't build something as basic as a plantation even if they were your puppet state. Even advanced nations with the tech and territory would build the stuff at a slow trickle, so all you could really do about it was go on a map-painting spree.