Economics

In Hearts of Iron 3, your country’s economic potential is represented in terms of Industrial Capacity (normally referred to as IC), which in rough terms is a measure of the number of “Factories” you have in all of your provinces. Each “Factory” represents hundreds of factories, modified by Technological advancements, Ministers, and other factors.

Industrial Capacity (IC)

IC is produced on a daily basis, and while it’s tempting to think of it as a daily income, it doesn’t build up like Money. It goes away if you don’t use it, so it’s more accurate to think of it as your daily “bandwidth” (to use a computer term): it’s what you want your industry working on for that day. While there’s not a lot that can be accomplished on major projects in just one day, persistent work on the same project will get it completed.

As head of state over your economy and commander-in-chief of your armies, you must decide what you want to produce by allocating IC toward Consumer Goods, Supplies, Upgrades, Reinforcements, and Production.

The three IC values displayed in the Information Bar refer to Wasted IC, Available IC, and Base IC.

Wasted IC refers to the amount of Available IC you have not allocated (i.e. it’s available, but it’s sitting idle). This figure is an important one to notice, because it means you are not utilizing your economy to its fullest, and you may want to consider adding Production orders or changing IC allocations in order to use the extra points.

Available IC is your Base IC, modified by your Ministers, your available Resources, your Policies and Laws, and any Technological advances you’ve made which affect Industry.

Base IC refers to the total number of home-country Factories and a percentage of Occupied Factories minus any Factories that have been destroyed by enemy bombing or conquest.

Industrial Capacity must be “fed” by Resources to work, as explained in A9.0 so keep in mind that Wasted IC is what you’re not using out of your Available IC, which itself may be reduced from your potential by Resource shortages and Combat. Your actual full production potential is only visible if you have sufficient Resource Stockpiles and can adequately protect your Industry.

Laws impact Available IC, as do Ministers, some Techs, and Combat damage as well.

Demand for Resources

Each IC (basically, each unit of factories) requires a certain amount of Resources to operate: 2 Energy, 1 Metal, and 1/2 Rare Materials.

You will need to maintain stockpiles of these Resources so they are ready when needed. If, for any reason, the stockpile of Resources is reduced to below what you need on a daily basis, your factories will begin to shut down, and your Available IC will be reduced to a point that is sustainable by the available Resources. As you put more Resources into your stockpiles, whether through Trade or the opening of more Convoy Routes and so on, your IC will again be available to you.

U.S. Armaments Factory

Resources & Trade

Resources can only be bought with Money, which you can acquire through Consumer Goods Production or from other Trade Agreements.

International Trade requires shipping to carry the goods back and forth, which means the Resources you Trade for can be attacked by enemy Submarines and Raiders during wartime. The buyer is always required to carry the Trade on their ships.

There is an exception: if two countries are on the same continent, they can Trade with each other overland.

For more information, see Trade strategy

Debt

During wartime, you have the ability to begin going into Debt, a Decision you can choose to make or not, and begin buying things on the world market with War Credit.

This is a two-part decision as it is a Diplomatic exchange and not a Policy Decision. Both countries must agree in order to bargain with Credit.

Special Comintern Rule

Comintern countries can give Resources to another Comintern country as a gift (i.e. trading for free). At the start, this is an incidental rule, because the only other Comintern countries are landlocked and on a different continent.

Oil & Fuel

Instead of just having to worry about oil supplies, HOI 3 has a more realistic system for Fuel which requires the refining of oil. You must first obtain oil and bring it home, at which point your country’s refining capacity will turn the crude oil into fuel for your war machine. You may also convert Energy Resources (i.e. Coal) to Crude Oil, using a relatively inefficient process which can be made more efficient through the discovery of new Conversion Technologies. Improving your Refinery Technologies will enable you to Convert Oil to Fuel more quickly. Your rate of Conversion from Oil to Fuel is based on your IC, modified by your Technology in related Techs. You may Trade for Oil or Fuel with other countries.

Ships, vehicles and other machines require refined Fuel rather than Crude Oil to operate. If the units, motorized or mechanized vehicles in need of Fuel are not directly connected by Supply Line with the Capital, then a Convoy must carry the Fuel to a Supply Depot near them.

Conversion

You will passively (i.e. without spending IC or other resources) convert Energy to Crude Oil, and Crude Oil to Fuel based on your effective IC. You can also produce Supplies by using IC. The rates are as follows:

• Energy converts to Crude Oil at a ratio of 0.1 Crude Oil per Energy consumed. The amount of Crude Oil per Energy can be improved by the Refining tech (+0.1 per level). The amount of Crude Oil produced can be up to 0.05 * your effective IC.
• Crude Oil converts to Fuel at a ratio of 1 Fuel per Crude Oil consumed. The amount of Fuel per Crude Oil can be improved by the Refining tech (+0.1 per level). The amount of Crude Oil consumed can be up to 0.5 * your effective IC.
• You can produce Supplies at a ratio of 7 Supplies per IC used. The amount per IC can be improved by the Supply Production tech (5% per level).

Money

Money is generated as a side effect of your Industrial Capacity. Money is also acquired on the world market in return for Trading away your Resource surplus. For this reason, countries are expected to build up reserves of Money during peacetime. Money is used to purchase things, such as Resources on the world market (Trade). If Money runs out during wartime, a country can make a Decision to go into Debt and begin buying things on “war credit.”

Consumer Goods

Consumer goods represent the many things regular people find necessary for everyday life – food, gasoline, household utilities, etc. During wartime, the people are generally more understanding of tough times and have a reduced demand for Consumer Goods. Even then, it’s necessary to keep a steady supply of these products available, or else the people will begin to become dissatisfied, causing Dissent to rise and National Unity to suffer.

There is a minimum level of Consumer Goods you must produce, which is below the level at which you begin getting Dissent. However, if you want to avoid or reduce Dissent, you must produce a higher level of Consumer Goods by using the sliders in the Production Interface. The level of demand for Consumer Goods can be modified through Educational or Industrial Policy Laws, Ministers, Government Ideology, and whether or not you are at War. If your country has lost a lot of its Victory Points in war – if you’re losing – your citizens’ demand for Consumer Goods will also be lower.

All military units also require a certain amount of Consumer Goods during peacetime, though this need ends with full Mobilization, as the needs of the units move away from domestic peacetime concerns and toward more purely military needs. A higher Neutrality rating lessens your Units’ need for Consumer Goods.

War Exhaustion (WE)

Countries which have been at war for a long time will have increased levels of War Exhaustion (WE), which makes them less willing to continue. Things such as combat losses, the loss of territory, and Strategic Warfare will impact the country’s War Exhaustion. This has no effect during war, but once peace is made, countries with high War Exhaustion will be less willing to join another war. WE is expressed as an increase to the country’s Neutrality value, once the country is no longer at war. This WE-influenced Neutrality value will reduce over time until WE is gone.

Mobilization

Peacetime Mobilization

There are restrictions upon how quickly, and in what ways, you can prepare for War before War is actually declared. Democracies will have an especially hard time explaining why they are taking such actions without valid reasons.

These reasons may come in the form of valid international Threats, which is represented by the Threat values. As the Threat to your country from potential enemies grows, you may have more freedom in how aggressively you prepare for war. That freedom is reflected in terms of lower Neutrality values. Otherwise, you may have to bide your time and set priorities that will enable you to prepare for war without really having all of the tools you would like at your disposal.

A Note About Gearing – The term “gearing” has had a long life in Paradox games, and it’s important to explain how this term has changed in HOI 3. Production “gearing,” as it was used in HOI 2, as a bonus for standardizing factory production, no longer exists. This concept has been replaced by the concept of Practical Knowledge in Tech fields, which gives you basically the same benefit but in a more permanent and valuable way.

Industrial Gearing – War Economy

An economy can generally be considered to be a “civilian economy,” on “war footing,” or somewhere in-between. Some Governments (Fascist, for instance) might end up converting part of their economy to “war footing” even before they’re at war. Other Governments might be at war but unwilling to fully commit their economy to that war.

The process of committing to a war is called Gearing. You can affect the Mobilization of your civilian economy through Economic Laws, choosing to move to a more Mobilized economy. You can also impact this somewhat through Industrial Policy Laws. Your Economic Laws may be limited by Government type and Threat level. If the Threat goes down, so must your Gearing policies, or else you must accept a penalty to your National Unity. Some Economic or Civil Laws are only allowed if you are at War, depending on your type of Government or if you are under serious Threat.

Your country’s population will expect you to end your Mobilization once peace is achieved. If you do not, Dissent will rise. Certain options, such as Laws you may have set, may have to be undone in order to reflect your non-wartime status. You may also select Demobilize from the Politics Interface, if you had previously Mobilized your Reserves.

Reserves (Units)

Producing military Divisions such as Reserves can help build your military potential without quickly increasing the expenses needed to maintain them. When you Mobilize, these Units will build their Strength so that they will hopefully be ready. The peacetime cost of Reserves depends on your Conscription Law.