The economic effect of having a large army
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The economic effect of having a large army
The cost of building and maintaining a large army with a defense index of 200 to 500 runs in the tens of billions per game month and the decision to build such an army must be taken carefully with an eye on the economy.
A large army has a profound effect on the economy of the country. Purchasing weapons can run in hundreds of billions per year and the economy must be able to pay for it. If financial resources are not available, the country will start taking loans to pay for the weapons. Interest payments resulting from these loans, will worsen the balance of payments.
Maintenance of the army is expensive and the cost will shift the balance of payments to the worse. If cost increases are not offset by increased income from a fast growing economy, the country will again fall into taking more loans and paying them with interest.
In addition, recruiting many soldiers and officers into the army, removes these people from the economy and may make it hard for corporations to find workers. Corporations cannot function if workers are not available and a fast growth of the army may reduce the production in the country.
There are many countries with large armies in the game and their economies manage to grow and pay the cost. It does require a balanced policy and long term planning to achieve this.
