Lets take an example of a 3rd world country with some potential and I'll give you a walk-through on how to balance the economy and make it grow. This is a good example because it'll use most of the fundamentals of the economic system.
For our country we'll choose Botswana. Why? It has a lot of potential. It's small, poor, and needs a lot of work... but has some good sides. Notably: Precious Stones.
Note: at any time you need happiness to win an election... raise healthcare and education for a couple months... then lower it after the election.
1) Pause the game. We need to set everything up. If you are playing multi-player, no biggie... but pause if you can.
2) Stabilize inflation. The inflation rate at the start for Botswana is around 8-9%. If the inflation had been much higher, we would have raised the interest rate to very high levels, but for now we want it high enough to lower the inflation rate down to about 2%, so we'll start it at around 30% and then down tweak it to slow the drop of inflation when it gets down to 3 or so.
Watch it as you continue on to the next steps.
2) Set all spending to highest except for Research, Propaganda, Health Care, and Education... set those to nothing. Research and Propaganda won't be required for a long time, and the other two are just too expensive right off. We'll raise those over time.
3) Set taxes to 80%. Forget about the pain it'll cause your people, because you need the cash more now for their benefit. Your people will absolutely hate you for a while... but they'll get over it.
4) Set the taxes on anything you cant produce (tobacco, fossil fuels, and plastics) to 30%. You can't hurt your production growth so you may as well benefit from what you can import. On the goods that you grossly overproduce (minerals and precious stones) set taxes to 50%. Everything else set to 10% so that you make a little but leave plenty of room for growth. Early in the game very few sectors have market availability and you can get away with murder.
5) At this point we are ready to un-pause and let our massive changes work themselves out. Un-pause for a month (until February 1) and lets see what happens... pause at the start of Feb.
6) Inflation down 2%. Thats dropping nice and fast... in another month or so we want to start slowing it. Budget balance should be around 2.4 billion. We could make even more if we made our two big exports gov't controlled... but the free market is keeping the production from crashing despite our 50% taxes... so we'll leave it. Besides we need good relations with rich countries and becoming more leftest makes it hard.
If you look at the graphs. (the button on the middle of the bottom) You'll see that Telecom and Infrastructures are growing nicely, human development is starting to creep up, diplomatic relations shot up (thanks to foreign aid), and that approval started at 0% and is raising (to roughly 8%).
7) You have about 200k in debt, but can easily pay that off with your income. Sit and wait. Pay off your debt. Monitor inflation. Debt will be paid off likely sometime in March. At this rate by June you'll have around 500 million bucks in cash... inflation will be between 2 and 3 percent and we're ready to slowly lower interest... and approval above 25%. You will be earning as much in tourism as you are paying out annually. Now is a good time to drop income taxes to about 75%.
8) Let the simulator run till you get inflation in check and roughly stabilized.
9) The immediate goal right now is to become a frirendly nation to the worlds rich nations... and to make yourself a viable investment option. Get corruption low, get stability high, get economic health high, and enact laws that are kosher with the worlds rich dudes.
10) Right click on the globe and change the Themeatic Map to Diplomatic relations. Look around. Green means they like you red means they hate you. Most countries are mildly pleased with you... 30 or so in relations. We need MUCH higher than this to get aid. Under "Internal Laws" set freedom of demonstration to permitted and set child labor to not permitted. Click ok, unpause, and watch relations. You'll have to click on another country and back to see the changes. Most of southern Africa hates you for the child labor law... and most of SE Asia hates you because of the demonstration law. However, North America and Europe are in love with you now... and they have the cash.
11) Let things run for 2-3 months. You may need to drop interest as low as 0% to get inflation to hold steady. You should have alot of cash on-hand. Lets spend all of that and take ourselves into temporary economic hardship so that we really look like poor bastards. Go to resources and go to Cereals (the most important). Spend all of your money increasing production. Spend until you are in debt up to half your yearly surplus. (ie: you can get out of debt in 6 months). This should take you from a major importer of cereals to an overall net balance. You are feeding your own people! You are also badly in debt. For now thats good.
12) Now we go on a begging spree. Ask for economic aid. You want to get at least 9. Only 9 economic aids will assist you at a time, but you want a couple more incase someone backs out. What those do is for each one you have active the country pays for 10% of the cost of your expenses. This is government, education, health, environment, all of it. This is in cold hard cash that you can spend how you like. Ask all the rich nations to give you economic aid... a few might. Dont worry if alot say no. After you are done asking let your economy run for a year. Get out of debt then continue down the food groups increasing production in the agriculture section. After a year or more go back into debt again and beg again. By that time your relations are higher, your corruption is lower, your stability is higher, and inflation should be in check.
13) once you have all that economic aid... you are home free. Spend like mad on your economy. Start with cereals and move down the list. Increase production until you are meeting your own demand. By the time you get to meats you'll start to see your countries per capita income grow rapidly. You'll also notice that by the time you finish the sector you are on you have to "touch up" the sectors you've already finished because they are growing. You shouldn't have to touch the services sector (and I wouldnt) they grow on their own when the HDL is high. Watch inflation during this... as growth kicks up you'll have to make adjustments.
14) once you have a powerful economy you can start to do somethings you want. Conquer someone... purchase territories that produce plastics, tobacco, etc.... whatever. You've been spending alot of money on foreign relations and you can likely conquer one nation without TOO much flack... especially if you pick one that is unliked. Find a country that produces any and all resources that you have a "0" production in. Since you dont have any research... build up a little cash and go on a shopping spree. Buy every tank and attack helicopter available... focus on quality artillery and anti-air and infantry vehicles. Get at least 1/2 of the soon-to-be-annexed contries infantry. Train all of the vehicles to max... train the infantry to second degree. During this time you may go into deficit... this is acceptable as long as you can come out of it. Invade, conquer, annex.
15) Now you have a newly minted economy to re-balance.
16) Now that you are strong and stable... raise research spending to max and leave it there. If your HDL isn't at 100 (and it should be close) get it there.
17) Have fun!
This is Hail_Timmler's Guide to new players, by an experienced player. But before we continue, want to remind everyone I am using the Realism Mod, and anyone who wishes to follow my guide accurately has to download the Realism Mod before continuing. The link for the mod is here at Wikipedia.
Having Said that, I hope you enjoy my guide and if anyone has any queries reguarding my guide, contact me at firstname.lastname@example.org for an answer. Enjoy!
An Excellent Example of a Third-World country is Kazakhstan. It has an adequate population base, and great economic potential. But it's greatest advantage is it's ability to conquer it's surrounding countries in a quick sudden effort. It's other great advantage is to get an easy Alliance with the Russian Federation, who can pump out huge amounts of arms, at affordable prices, quickly. So let's get started and follow the steps:
Step 1: Pause the Game. Start setting your Interest Rate to 0.5, and Tax Rate to 49.9% as Kazakhstan needs money desperately. The general Population will not enjoy this hike, but can be easily solved by legalising Abortions, and Freedom of Demonstration.
Step 2: Unpause the game and watch your cash flow. If there is still a money deficit (losing more money then you are gaining) then adjust the Budget accordingly. Wait about 6 months, then pause the game again.
Step 3: Don't set any global taxes to your economy. It hurts your people and economy, and is self destructive in my view. If you have the banked money to do so, increase production in sectors where you need it, But don't go too far into debt, because the more debt you have, the more money you lose off your income.
Step 4: It's time to start building a military! Train whatever military units and covert forces you have at your disposal to Level 1 Training. Buy some units on the international market, as Kazakhstan cannot build anything other then Infantry at the Beginning of the game.
Step 5: Set the budget sections of Tourism and Foreign Aid to the most you can afford. If you have the Realism mod, Expanding will be much easier, as you can simply trade land to surrounding nations for free, and then peacefully annex them. But this takes all the challenge and fun out of it. If you want a challenge, do not do this, but realism mod is still worth downloading.
Step 6: By now, your General situation should be improving, and you should have a adequate military, a decent economy, and a good standing on the World Politcal stage. It's time to invade Uzbekistan!
Step 7: Invading Uzbekistan should'nt be hard, if you bought a lot of Tanks and Artillery Pieces on the Global Market. Train them up, and attack the Western side of Uzbekistan. They should attack back, but if you have good long-range and Armour superiority you should win. Having a good Anti-Aircraft capability doesnt hurt either.
Step 8: The international community will be a little pissed off with you, but it shouldnt matter. Invade and annex Uzbekistan, and now stabilise the political and economic scene in the country.
Step 9: You should now be a major power in central asia. Secure an Alliance with Russia, and you should be well on youre way to becoming the world's greatest superpower!
Hail Timmler 2/1/07
A good tactic when you have completed the top article is to sieze war-torn powers. I will use china as an example.
China is quite agressive. In my game, they attacked many nations in quick sucession. Obviously, the world didnt like this, so they retaliate. You would join the larger allied side against in this case, China. See, the other nations in the alliance will not invade China itself They defend against whoever china was attacking. Here, you would sieze all of china. Annex it, and the world will not dispise you, because in essense, you are doing them a favor. Rince and repeat and you have conquered all.
Some Other Ideas
When starting your game be careful and pay attention to the diplomatic relations overlay the most. I will give you a very good overview of who to attack first if you are a country that must continue to expand. As a general rule of thumb is most of western europe is an enemy of the nation it is safe to attack because if your relation are good enough they will come to your aid and if those relations are not that great then you can expect to not see resistance.