A Beginners Guide to Victorian Economics (1.6)

NOTE: Partially outdated by the 1.7 update, particularly in the area of upper strata involvement with buildings. Pending a rewrite or new guide.

A Guide dedicated to the explanation and understanding of Economics in Victoria 3 for players new to the game, with the end goal of the guide to explain the various systems and how they work together as of 1.6 enough that a new player can begin to understand the functionalities and avoid frustration due to a lack of knowledge.

PLEASE NOTE: GUIDE IS SUBJECT TO RE-WRITES AND UPDATES AS I'M QUITE NEW TO WRITING THEM. If you feel confused at any point, it's likely not you and is a very inexperienced me on guide writing trying to share information in a potentially bungled way. As I help you learn Victoria 3, help me learn how to write better guides!

Introduction

Salutations Victorians, today we'll be going over the basics of the economic systems of Victoria 3. This guide is intended for newer players to the game who may be struggling to understand various parts of the economy section of the game, for example:

What's MAPI?
How do I grow my GDP?
Why won't my factories hire workers?
How I do I raise my standard of living?
How do production methods' work?
What's a company?

And more questions, all of which are tied into the economic systems of Victoria 3. We intend to answer as many of these questions as possible for a new or new-ish player in order to provide knowledge and understanding that'll translate into a more enjoyable gameplay experience. With that said, lets get started as we use Belgium for this guide!

What is MAPI?

The most pressing question to answer that could throw any new player for a seriously damaging loop is what's MAPI? MAPI stands for Market Access Price Impact, a critical core of the Victoria 3 economic loop after it was added in 1.5. If you feel like you suddenly weren't doing as good compared to your pre-MAPI games, you're not alone!

Let's take a look at MAPI and figure out how it works.


Above is an image of coal in the Belgian market, with both Belgian states at the start of the game visible. Our state of Flanders makes no coal, while our state of Wallonia makes coal and this has led to a difference in price between the two!

MAPI (Market Access Price Impact) is why. Belgium starts at 85% MAPI, which means the local price of goods in a state is impacted by two primary factors:

- 85% MAPI means 85% of the price of coal in Flanders is dictated by the price of coal in the entire market at the "national" or "customs union" level. As long as adequate infrastructure is supplied, 85% of the price will always be decided by the market price.

- This means the other 15% of the price effect is decided by local production and consumption of the good. As Flanders makes no coal the price of coal in the state is higher than the market price, and the price of coal in Wallonia is below market price because it makes coal!


This means that any coal usage in Flanders is treated as if it was 10% of base price instead of the market price of -0% of base price under our current 85% MAPI, market price, and local production/consumption.

MAPI percentage does act as a "floor and ceiling" for the price of goods in a local market too. Even if Flanders consumes thousands of coal, as long as the Market Price is -0% under 85% MAPI it won't become too severe beyond a higher price. This also effectively means that a higher MAPI is always better, as it allows you to better connect your entire market together.

The highest MAPI can be with all possible technologies is 95% in most states, meaning local price will have a little impact no matter what. Some states have a special modifier that gives them +5% MAPI due to certain rivers, but most states will sit at 95% with the highest technology. Stock Exchange, Zeppelin, and Macro-Economics are the three Social techs that boost MAPI.

What does MAPI mean for you in the end? It means that the lower MAPI is, the more focused you should be on local synergies for your industries where possible. You wouldn't want to build a steel mill in a state that has no iron or coal, especially early on as MAPI will cause the cost of iron and coal to be higher than your actual market price. This will significantly hamper the steel mill and its potential to grow, something that could rapidly push a player into a weak or even stagnant economic loop.

On a final note, Transportation, Services, and Electricity are treated as "Local Goods" in Victoria 3. This means the good can only be used in the state it's produced in! While transportation is made from railways and urban centers, Services are made from urban centers too, and the only major local good to be concerned about in the long run is Electricity in the mid-to-late game.

What's a company?

Companies in Victoria 3 are, shall we say, special groups that can bolster certain buildings and their capabilities in a way that benefits your economy depending on your goals. Depending on your economy and your plans, various companies are better than others for you. However, we'll only delve into what a company is and how it can help you as a player.


Here we have a Belgian company that Belgium starts with. We can see when it was established, the name, what buildings it effects, how prosperous it is, and the effects we'll gain when it is prosperous. Let's nail down a few key things:

- The buildings that a company will impact directly will be shown as little block pictures, in this case this specific Belgian company impacts Tool Workshops, Steel Mills, and Motor Industries. A company will improve the Throughput of those buildings as well as make them be constructed more efficiently.

- What does it mean to construct more efficiently? Simply put, it means you need less construction points to get the "same" amount out of it. If you normally pour 25 construction points per week into a Steel Mill, this company under current effects. In the image below, we can see that 10 construction points are being converted into about 13.37 actual construction per week. While this is small on paper and not the full benefit we can acquire, the extra 29.6% construction efficiency from the company means we're building with more points than we actually produce. On a larger scale, this can reduce how many construction points you pour into various buildings and allow you to build more at once!


- When a company is prosperous, it will activate a bonus effect. In the case of this company, it'll boost the throughput of our Railways by 10% once it hits 100 Prosperity out of 200 (which gives you a little buffer in case things aren't profitable.)

- But wait, how do I get a company to be prosperous?! Simple, you need the average productivity of the buildings your company effects to be about 1.25 times higher than global average productivity. With proper economic planning, this is more than doable for many companies. That said, don't be worried if you don't get the hang of it right away as these are bonuses for high productivity.


- Another thing about companies is that two versions exist, Generic Companies and Special Companies. Generic Companies are available to everyone so long as they can build their associated buildings, with no restrictions except for that a small stack (usually a level 3 or a level 5 building) must exist in a state.

- Special Companies usually have restrictions that make them harder to access, but also make them more specialized. This could be a specific cultural restriction, or more generally will be a restriction of geography where certain buildings need to be built in a certain state before you can choose it. Special companies with geographical restrictions won't show up in your "attainable" or "potential" company list unless you have an interest (or ownership) of the state(s) they're restricted to.


As an example, this special company requires us to own either Flanders or Wallonia (Wow, we own both!), to have one of them incorporated, and to have at least a level 3 motor industry in that incorporated state. If we meet all these requirements and have a company slot open, we can make it our company!

You can have up to 5 companies normally via social techs over time, or 6 companies if you have the Laissez-Faire economic policy. If you want to change companies, you can disband a company in order to do so. However, two key restrictions exist for this!

- An established company cannot be disbanded for the first 5 years of its existence.
- A company cannot be re-established for 5 years after being disbanded.

Keep this in mind when you decide to switch companies, as you cannot just switch back right away or immediately disband it if you don't like it! (Although you could save scum, but why would you do that to poor Belgium?) Furthermore, do note that there is a penalty for stacking companies that effect the same building where the applied bonuses will gradually apply "less" with each stacked company. 1 company may provide 20% throughput to iron mines, but 2 companies that boost iron mines will only provide a total of 30% throughput and so on.

With that said, feel free to experiment with companies and figure out which ones you like the most! The ones you end up using may depend on your economical objectives/goals and your available resources, but well-used companies can be a useful asset to industrialization and faster economic growth.

Wait, what's Throughput? What's Credit?

Yeah, I mentioned that in the previous section didn't I? Better go over it!

Throughput is a modifier to production of a building. While many things can modify Throughput, the simple explanation is that it'll modify the input and output of a building by the percentage provided. If Throughput is +10%, the input and output goods will be increased by +10%.


Is this a good thing? Unless your economy is in a seriously haphazard and highly unsustainable position, positive Throughput is always a good thing as it can allow your farms and mines to produce more of a limited resource. Throughput also does NOT directly increase wages, meaning a profitable building will become more profitable as positive Throughput rises which can enrich the owners of a building further. However, this can provide the owners with a means to raise wages due to that increased profitability, and higher wages can lead to better Standard of Living for workers!

Wait, positive Throughput? It can go negative? Yes, yes it can. Most notably Throughput will begin to go negative either from various events, usually related to law change attempts or journal entries, or most likely from the player going into default from borrowing more money than their credit allows.

As a quick overview, Credit is how much money you can borrow and is decided by the cash reserves that your buildings have. (You have to borrow from someone after all, and last I checked there isn't a Bank of England to build here!) If you borrow too much, you'll go into default which can rapidly grow into a crisis that devastates your economy as your throughput goes very negative. Everything can grind to a halt during a default if you don't dig out of it.

Do keep in mind of this as well, nations with a lower power ranking and ESPECIALLY unrecognized nations like Qing and Japan will have higher interest rates. This dictates how much of your debt you pay interest on per week, with higher interest rates demanding larger payments.


With that said, debt itself isn't bad. Just avoid a default, and avoid way too much interest eating up all your revenue, and you'll be okay. Positive throughput is very good and is extremely rarely a bad thing, with the only time it can be bad is if it throws various goods to become "too cheap" too suddenly and causes a business to lose money long term.

What are Production Methods and how do they help?

Production Methods are, in a simple manner, how a building will make goods and interact with other things. It decides what inputs and outputs it'll use and produce, as well as what kind of workers it'll hire. We'll use some mines in Belgium to give our examples!


Here you can see the various production methods we could potentially employ to our iron mine. It decides the workers it'll hire, the goods it'll consume, and the amount of iron it'll produce. Generally speaking, higher production methods are usually better in good economic circumstances at the requirement of more literate/experienced pops. Laborers, in this case, are often replaced by machinists and engineers for mines who require higher literacy, and sometimes wealth, to have the necessary qualifications. We'll go over qualifications later!

Many production methods, or PMs, are locked behind various technologies that you'll need to acquire. If you mouse over a PM you can't use yet, the game will inform you of the technology you need in order to unlock it.


On that note, different types of PMs exist and are named the following:

- Main PMs, in this case the PM that decides how much iron to produce. These PMs often decide how the building produces its main good and can, early on, decide whether it's owned by shopkeepers or capitalists.

- Secondary/Purple PMs, these are alternative PMs that can be activated or deactivated. These usually add new input goods to either boost the production of the main good or activate a "trade-off" effect where the main good will be partially produced less in order to make another good. Liquor from Food Industries is a primary example of Purple PMs in action, and is something you'll have to decide on for whether or not you want to make these at the cost they incur.


- To the left of that Purple PM are Green PMs, known as Automation PMs. These are PMs which decide how much of the work is automated instead of using workers, fully utilizing input of goods to remove workers entirely. These are only profitable for a business if the input good used is cheap enough compared to the wages of the removed workers, but often times automation is used to free up workers for more buildings when you run out. You don't have to use automation PMs, but you may need to if you run out of workers.

- Finally there are blue PMs at the far left of all PMs, these are Ownership PMs and they decide who owns the building. Shopkeepers? Capitalists? Workers? The Government? These are usually locked behind some later social techs, but generally have a significant impact on the social fabric of your country as it decides who accumulates a great deal of the wealth made from buildings. While not imminently important, you'll want to understand these whenever you're going about making some permanent changes to your society! (Communism, anyone?)

With all that said, we've covered both Throughput and PMs at a basic level that have hopefully given you some idea on how they work! (If not, blame the literacy rate.)

Why won't my factories hire workers?

Before we move on to actually growing your economy and raising the Standard of Living, we need to address a problem people certainly run into. You've built that new steel mill, you've got those iron and coal mines churning, the tool workshops are demanding steel at an extremely high rate, yet for some reason your definitely profitable steel mill is struggling to hire? What gives?

Remember how I mentioned Qualifications earlier? It's those! Qualifications are, essentially, whether a pop has the literacy/knowledge to do a job and the money to afford the classes/items/connections to actually get it and do it. You can't expect a peasant from dirt poor nowhere to suddenly know how to run an entire factory like a capitalist if he lacks the knowledge and finances to even try it!


For example, these laborers in our food industry have a standard of living of 8! They're struggling, but access to religious schooling means they have 36% literacy and are able to generate various middle-strata qualifications at a slow rate. However, their poor SoL/wealth means they're unable to generate any capitalist or aristocrat qualifications. They'll need to find better jobs, or be paid more perhaps, before they can dream of that sweet steel mill they'll own by the Liege iron mines. Higher literacy and wealth means qualifications are generated at a faster rate, whereas having too little literacy and/or wealth can cause a pop to lose higher strata qualifications over time. Without qualified personnel, nothing runs!

How does this impact that steel mill? Well, if you happen to have no capitalists available in a state then you can't hire anyone to actually own and run the building! Sure you may have laborers, but the game won't full hire one pop group if it lacks the means to fill up the others and this can lead to a situation where your beautiful steel mill is half-staffed despite the fact you can't make enough steel to meet demand.


All states have an area where you can view qualifications in their "buildings" section, this can help tell you how many potentially employable qualifications you have in a state to use and how many you're estimated to gain next month. Does this guarantee you'll hire those 942 capitalists? Sadly no, as they may not be seeking a new job! That's another issue that could choke your hiring processes, your pops may already be satisfied with their current job and refuse to leave it! That said, generally increasing the overall literacy rate and standard of living in your country will mitigate and mostly remove this issue in the long run. But for a more early on situation, you'll want to try and spread out buildings to avoid this problem.

Furthermore, the Serfdom law will greatly reduce the qualifications that the Peasant pop will generate. As peasants usually make up a good chunk or even huge majorities of starting populations, this makes the Serfdom law a significant threat to qualification generation! Make sure to get off of it when you can, unless you're having fun roleplaying.

Universities that exist in a state will also provide a small boost to qualifications depending on the PM used in them and the amount built. It's up to you on how many to build!

If you ever have a problem with hiring for a building, check your qualifications in a state! This is likely the source if your building isn't having an issue due to profitability. AS A SIDE NOTE, some buildings may not hire for the first few weeks if they're the first building to exist to produce that good. Technically no supply exists and demand may not yet exist, which can sometimes cause an "instant-fail" in trying to hire and make the building wait a few weeks before trying again.

Hopefully this helps you reduce instances of hiring problems! Get those qualifications up, and perhaps now is the time to talk about Standard of Living!

How do I raise Standard of Living? How does it help me?

Standard of Living, the benchmark of just how well your society is doing! (If you care about the people, that is. If not, maybe GDP is your benchmark?)

Standard of Living, also known as base wealth if modifiers are present, represents just how well (or poorly) a pop group is living. This impacts their birth and mortality rates, what goods they buy, how many they buy, their qualifications, and whether they want to burn the government down because the price of grain is starving them. Generally speaking, higher SoL (Standard of Living) is better and a growing higher average will see pops demand new, more luxurious goods as well as more goods. This, in turn, generates more demand which can be used to employ more pops to help the unemployed grow in SoL, allowing more demand to make more jobs, etc. and developing an economic loop.

Something to quickly note is that higher literacy levels will cause a pop group to have a higher "minimum expected" SoL. For example, our fabulous engineers below expect to at least have an SoL of 15 or greater. If a pop group is below their minimum expected, they'll slowly radicalize against the government (You!) and can eventually become a problem if too many pops have this issue. Literacy is a good thing, but literate, struggling pops are often not!


Whenever a pop group grows in SoL, some will become loyalists (or stop being radicals if they already are) and whenever a pop group falls in SoL, some will stop being loyal to the Government (or radicalize and decide that this relationship with you just isn't for them right now.) Higher SoL at certain points can lead to pops demanding new goods that help your economy grow. As an example below, pops that reach a base SoL/wealth level of 15 will begin to demand luxury goods alongside their other needs!


Wait, base SoL? Base wealth? Why note that?

Base SoL/wealth refers to a pop groups' SoL before any modifiers. Modified SoL WILL NOT impact pop demand or the goods they buy, only base SoL/wealth will. However, modified SoL WILL impact their birth/mortality rates as well as will count on whether they're hitting their minimum expected SoL or not. A shift in modified SoL will also impact loyalists and radicals as if their SoL changed. (Because it technically did!)


To note, modifications to SoL will only occur if the total modification is a whole number. -0.99 to SoL from pollution won't actually impact their SoL, but -1 will! This also means a situation of -1.2 SoL from pollution, but +0.5 SoL from healthcare will cause the two to cancel one another out.

Moving on before we drown the beginners in more math, the last thing we'll touch on for SoL at a beginner level is how high SoL pops will actually stop demanding basic goods. This isn't too important to note initially, but is rather a reflection of how an enriched society may begin to demand some goods less and others more. You can't just expect a Lavish capitalist to eat grain, right?


For example, pops will stop eating things like fish and grain once they hit a base SoL of 30 (affluent). You can also see how some goods act as "substitutions," but we won't need to go over this right now for the basics.

On a final note, SoL is decided by the income a pop group makes, the expenses of goods that they buy (expensive food and intoxicants are NOT good long term), and how much of their money goes to taxes. High taxes can help you spend more on construction (and is arguably encouraged early on), but keep in mind that's less money for your pops!

That about covers it for the basic level of SoL and how it impacts you! Low SoL means slower qualification gain (or none at all!) and high SoL means more goods are demanded by pops. Now lets actually talk about growing your GDP to close this first guide off.

How do I grow my GDP? (Finally!)

Alright, we're in the last leg of this race. How the hell do you grow your Gross Domestic Product (GDP!) and actually make the line go up instead of down?

First you need to understand how the game even calculates GDP. GDP is calculated in Victoria 3 by the amount of goods made and their value. The more of a good you make, the higher GDP can go, and the more valuable (Expensive!) it is, the more it contributes per item. Generally speaking, you want to produce more and more goods over time to grow your GDP and using more of those goods will help GDP grow long term.


That being said, cheap goods aren't necessarily a bad thing. Cheap food and cheap intoxicants will help your SoL grow, which will then cause more demand from those pops as their SoL rises! Yes cheap grain will generate less GDP than expensive grain, but rising SoL can buoy the price and cause other goods like clothing and services to grow in demand. Plus you get more qualifications over time from these richer pops, translating into more buildings and employment that then translates into more demand and more GDP growth! The (basic) economic loop!

Okay, but how do I *actually* grow my GDP aside from randomly making goods?

The key component early game isn't to build consumer buildings, but actually to build up your construction industry! Early on you'll either be using wood-based construction (wood and fabric) or iron-based construction (wood, fabric, iron, and tools) in your construction sectors. (Hey look, PMs!)

As a sidenote, steel-framed construction switches you over to steel, glass, explosives, and tools for construction. Not only does this mean even more construction points per construction sector, it also means you're using more expensive goods and generating more demand for them to then produce more of them. As iron is used for steel and tools are (generally) made from wood, this is a good mid-game transition for your construction to grow even further and faster.


By investing into what goods you need early on to build, you can balance out the expense of building while also generating jobs and early GDP growth. In essence, you're kick starting your industrialization by first building up what helps you build things! As your ability to support more construction sectors grows, you'll be able to build more at once which will then translate into more employed pops, more industrial good demand, and more building to then spread out to consumer goods and government needs. This is a core part of the economic loop as your population grows, and will often be the early source of GDP growth.

Once your construction economy is off the ground and building multiple things at once, (unless you're Krakow. Sorry Krakow, you won't be building multiple things at once for awhile.) it'll be time to split your construction up and start building things your pops need and demand! The best idea is to usually target goods that are expensive in the market, as these will be profitable for a good while even as the price falls down. Alternatively, build things that lower the price of expensive SoL goods like food, intoxicants, etc. in order to raise SoL and thereby raise demand.


We skipped over it in the SoL briefing, but these nested tooltips allow you to see some of the expensive goods that your pops are spending their hard-earned money (or welfare) on. Lowering the price of these goods enough can sometimes, though not always depending on circumstances, allow pops to rise in SoL and thus generate more demand. If your SoL and GDP need to grow, some of these goods (after construction is off the ground!) can be addressed. While higher PMs can help you make more of these goods, so can having more of the same building. Figure out where things stand and go from there!

As a side note, this panel to the very right of your screen will tell you which goods are the most expensive (on the left side) and the cheapest (on the right side) in your market. They're not 100% perfect as prices are constantly changing, but this can give you another idea of goods you can make to try and address prices. It also notifies you of any market shortages you have! (Who needs glass anyway?)


As an additional example, this is currently telling us that grain is quite expensive alongside fabric! We can make grain farms and some livestock ranches as Belgium in order to address this, but this isn't strictly something to follow. We could make fishing wharves in Flanders to provide food instead, or ignore the problems with fabric to instead build more iron mines to support more construction sectors, tool workshops, and steel mills! It's a guide to help you, not a rule to follow!


Sidenote, you can also check your population tab for the goods your pops are spending a percentage of their money on instead of trying to hunt down the nested tooltips.

With that said, I do believe we have covered enough beginner basics of the economy to give you an idea of what to do! Is this enough? Probably not, but I doubt you want to read walls of text all day long and you should try it out yourself in game to gain some experience! You can do it!

Closing Statements

Thanks for getting to the end of this guide (or scrolling straight to the bottom. Either way, hi!), this is my first time making a guide and I genuinely hope it has helped you, or someone else, understand a little bit of Victoria 3s' economic system as of 1.6.

If this guide did help you or if any of it confused you, do let me know! I'd very much love feedback so this guide can be reconstructed to a better version of itself and so future guides I make will be more informative (and hopefully not dull?) to anyone that reads them!

Farewell Victorians, until the next beginners guide! If this goes well enough, we'll even see intermediate guides that are longer (maybe?) and go more in-depth with mechanics and touch up on other mechanics.

[Enguerrant]

great guide, thank you

[Jelly]

This is very helpful, thanks.

[Waggy]

Good guide even for 1.7

[KungFuBrew]

thankyou

[Darknight]

And thank you to everyone who has spent time reading this guide! I hope it has helped many of you!

[Darknight]

Guide has been marked as partially outdated as 1.7 has changed upper strata involvement with buildings and other possible factors. While most of the information is still usable here, please note it may not be entirely accurate due to the 1.7 update.

A 1.7 version will be made after the hotfixes are dropped, to ensure procured information is based on accurate and working game systems instead of bugs or unintended results.

[Preszburg]

Thank you very much!

[ZRZK2127]

make one for 1.7

[T'Ken]

Thanks! Very helpful to understand some of the basics.

[trito.jean]

i might be wrong but i'm pretty sure its been some updates that GDP dont count intermediate good