When to allow foreign investment?

[DaniTheHero]

I don't seem to quite understand when is it recommended or not.
I keep seeing posts of people warning against ever allowing it, as mid game you get crippled, but then others seem to always jump on the opportunity especially when playing a minor nation.

[Oracle]

the main problem for now, if you are on lazze and then will try to nationalaize, this simply wont work, otherwise you could allow people to build like 50% of gdp and than simply get it back for free =D

[Jason]

I think it can be a good thing to "jump Start" your building especially if you have limited construction points available and a lot of pops to put to work. The goods will stay in your market. The dividends will leave your country but the wages the workers earn could be taxed by you. IMO, the key is to let one country build for a little while then revoke the investment agreement. It will hurt the relations a little but that's ok. Then, if you still have pops available, you can let another country build a little bit, etc.
As stated above, your EVENTUALLY want to either own those buildings yourself or at least have your pops own them. So, choose a country to allow to build that you think you will eventually be able to win a war against to nationalize their buildings forcefully OR you can buy those buildings once you have enough excess treasury saved up.
But, you need to do that BEFORE getting L-F or another law that prevents nationalization (whether with compensation or without it). You don't want to get into the mid to late game having another SINGLE country owning a significant portion of your economy.

Also, you can't control WHAT they build but you can influence it by trying to keep prices of goods low for the buildings you DON"T want them to build by Protecting Domestic Supply or importing some of those goods.

This is, of course, just my opinion on the subject and I am open to arguments otherwise...

[Razorblade]

If you can sustainably maintain an excess of Peasants, through migration, expansion, or just starting out large, it is generally a good thing. Most tax laws tax income, and poor Pops can't buy your country's goods, so an employed pop is always better than a Peasant. As such, even if you can't tax the building or its owners, you're winning if your Pops are moving up the economic ladder.

If you only have a small Peasant population, and no means to regularly expand it, however, it can wreck your economy. Private investors tends to chase their somewhat braindead idea of profit at the expense of all else. If you have free infrastructure, they'll keep building buildings, siphoning your Pops from more important jobs, which can potentially collapse your economy.

This applies to both your own and foreign investors; the difference being that you'll fill up on buildings potentially faster with additional foreign investors. Moreover, if they know how to build Railroads, they may just keep building them every time Infrastrucute runs out, until you're broke from Subsidies.

In my experience, you always want investors to have an outlet for their investments, lest they wreak havoc on your economy. While you have a supply of Peasants, your own country is the ideal target for that investment; your own investors are (eventually) taxable, after all.

However, if the Peasant supply runs dry, you had better have some Investment Rights or vassals with free Peasants to dump that excess capital into. Or, better yet, just have a sustainable way to expand your domestic population.

[DaniTheHero]

Originally posted by Razorblade:

If you can sustainably maintain an excess of Peasants, through migration, expansion, or just starting out large, it is generally a good thing. Most tax laws tax income, and poor Pop can't buy your country's goods, so an employed pop is always better than a Peasant. As such, even if you can't tax the building, you're winning if your Pops are moving up the economic ladder.

If you only have a small Peasant population, and no means to regularly expand it, however, it can wreck your economy. Private investors tends to chase their somewhat braindead idea of profit at the expense of all else. If you have free infrastructure, they'll keep building buildings, siphoning your Pops from more important jobs, which can potentially collapse your economy.

This applies to both your own and foreign investors; the difference being that you'll fill up on buildings potentially faster with additional foreign investors. Moreover, if they know how to build Railroads, they may just keep building them every time Infrastrucute runs out, until you're broke from Subsidies.

In my experience, you always want investors to have an outlet for their investments, lest they wreak havoc on your economy. While you have a supply of Peasants, your own country is the ideal target for that investment. However, if the Peasant supply runs dry, you had better have some Investment Rights or Protectorates to dump that excess capital into. Or, better yet, just have a sustainable way to expand your population.

So.. It's mostly recommended on Nations like Qing and Japan then?

[Razorblade]

Originally posted by DaniTheHero:

So.. It's mostly recommended on Nations like Qing and Japan then?

They would be ideal targets for foreign investment, but you don't have to have nearly that much population for it to still be useful.

Two Sicilies, for example, is only a handful of provinces, but has a large enough starting population and population growth that they seem to always have free Peasants to invest in.

Similarly, all of the German minors have effectively infinite Pops, as they can siphon Pops from other German states through Migration by having a higher standard of living, since they're all part of the same market.

Back to the Italian peninsula, Modena and Parma, being only 1 state large and having pretty conservative laws, make for poor investment targets. They will run out of Peasants quickly, and not be able to refresh their supply through natural growth or Mass Migration. Only by joining another Market do they really have any chance to gain a significant number of new Pops, and that's not really a realistic option for them.

Tuscany, meanwhile, is only 1 state large as well, and in its own market, but has a powerful Intelligensia in government. Played correctly, they can build up their SoL, easily pass the Cultural Exclusion and Separation of Church and State laws, and start attracting Mass Migrations, making their supply of Peasants fairly sustainable.

It's solely a question of if you can generate enough Peasants to meet the demand for employment.

[Dummkopf]

I haven't actually tried it yet to see how it really plays out. The AI is completely incompetent at building economy in this patch, so the only real AI nation that could effectively invest would be Britain in the early game. Logically it doesn't seem worth it because a lot of your economic growth is tied to how big the investment pool is. Private dividends are more efficient than government dividends too. In the end you would be trading away a big investment pool for increased taxation at most. Hypothetically you could use those taxes to expand the economy. Though I feel that building a large capitalist or aristocratic base takes time and you'd be just crippling yourself later like you said.

As a side note, homesteading law has the potential to be extremely bad. It basically halves the amount of aristocrats in your country. Half of all subsistence farms go to farmers/peasants which also nearly halves all manor houses and thus amount of aristocrats. A good way to reduce the power of landowners and increase standard of living, but farmers don't reinvest as much.

[Jason]

Originally posted by Dummkopf:

The AI is completely incompetent at building economy in this patch, so the only real AI nation that could effectively invest would be Britain in the early game.

I am curious as to why GB AI is better?
But, of course, I have seen the AI do some dumb things. France built an Explosives factory in my country (with my own market) and no Fertilizer plant. I didn't have the technology to build my own fertilizer plant or use fertilizer or explosives for that matter... I guess they were hoping I would produce some explosives that they could import?
So, of course the building sat there empty, using infrastructure, and generating an annoying fertilizer shortage alert.

[DaniTheHero]

On the same vain, when to allow Mutual investment? A Greater power will build faster than you, meaning they'd cyphon more gdp than you cyphon from them, no?

[Carolean]

Originally posted by jlane0710:

But, of course, I have seen the AI do some dumb things. France built an Explosives factory in my country (with my own market) and no Fertilizer plant. I didn't have the technology to build my own fertilizer plant or use fertilizer or explosives for that matter... I guess they were hoping I would produce some explosives that they could import?
So, of course the building sat there empty, using infrastructure, and generating an annoying fertilizer shortage alert.

They wanted an export market for THEIR excess fertiliser production.

Galaxy brained AI move honestly

[Carolean]

Originally posted by Carolean:

They wanted an export market for THEIR excess fertiliser production.

Galaxy brained AI move honestly

Two days later I have paid for my joke, I'm currently playing Japan and the UK built an Explosives Factory in me after they opened my market.

At least I'd already built a Fertiliser Plant

[Pamparampampamparam]

For a large country like the United States, is it beneficial to only grant investment rights instead of a two-way investment agreement so that your capitalists only build in your country?

[Carolean]

Originally posted by Pamparampampamparam:

For a large country like the United States, is it beneficial to only grant investment rights instead of a two-way investment agreement so that your capitalists only build in your country?

Depends if they have resources in their country that you don't have but need.

For the US though the only one I can immediately think of is Opium.

[Pamparampampamparam]

Originally posted by Carolean:

Originally posted by Pamparampampamparam:

For a large country like the United States, is it beneficial to only grant investment rights instead of a two-way investment agreement so that your capitalists only build in your country?

Depends if they have resources in their country that you don't have but need.

For the US though the only one I can immediately think of is Opium.

I was thinking more about the UK investing in the US early game to help with the massive amount of building you need to do.

But I've learned the hard way thats probably not a good idea, unless you're able to nationalize everything before moving to LF (which can be VERY expensive and will piss off what could be your greatest ally). I had mutual investment rights with Britian since the very start of the game and didn't revoke them until the 80s, and now a good portion of my most profitable industries are producing capitalists jobs in Britain and not America, stunting my investment pool.

Basically if you play a major, NEVER let anyone else invest into your country, ONLY request investment rights IN OTHER COUNTRIES.

[Carolean]

Originally posted by Pamparampampamparam:

Originally posted by Carolean:

Depends if they have resources in their country that you don't have but need.

For the US though the only one I can immediately think of is Opium.

I was thinking more about the UK investing in the US early game to help with the massive amount of building you need to do.

But I've learned the hard way thats probably not a good idea, unless you're able to nationalize everything before moving to LF (which can be VERY expensive and will piss off what could be your greatest ally). I had mutual investment rights with Britian since the very start of the game and didn't revoke them until the 80s, and now a good portion of my most profitable industries are producing capitalists jobs in Britain and not America, stunting my investment pool.

Basically if you play a major, NEVER let anyone else invest into your country, ONLY request investment rights IN OTHER COUNTRIES.

To add onto this, especially don't let other GPs invest in you if you're a Trade Bloc leader. It lets them invest in your subjects and YOU want to own their GDP, not have Britain do it.

Only let countries you intend to pull into your bloc invest in you in this case (eg: I do this as Scandinavia with Japan of all countries, because as it turns out the Viking-Samurai alliance is a surprisingly good one for dealing with Russia).