Economy of Pelaxia

Pelaxia has a highly industrialized, socialist market economy that incentives social ownership and democratic control of means of production effectively and constantly in various forms such as public, cooperative, collective ownership with the possibility of combining the three. In this sense it discourages the existence of private ownership of means of production (private property), but completely upholds and defends the right to personal property. Pelaxia mostly utilizes the market mechanism for the allocation of capital goods and other means of production although there is an edge for central or local intervention/planning. The public sector is among the largest in the world as a percentage of the overall gross domestic product. The country has a very high standard of living compared with other socialist countries, and a strongly integrated welfare system. Pelaxia's modern manufacturing and welfare system rely on a financial reserve produced by exploitation of natural resources such as oil.

With respect to foreign trade, the key economic sector is manufacturing, but much of Pelaxia's economic growth has been fueled by an abundance of natural resources, such as petroleum exploration and production, hydroelectric power, and fisheries. The largest industries are electronics (21.6 percent), machinery, vehicles and other engineered metal products (21.1 percent), oil industry (13.1 percent), and chemicals (10.9 percent).

Types of economic exploitation
Public Ownership: refers to property interests that are vested in the state or a public body representing a community as opposed to an individual or private party. State ownership may refer to ownership and control of any asset, industry, or enterprise at any level (national, regional, local or municipal); or to non-governmental public ownership. The Pelaxian Federal government may own partially in this sense the Banking System and several means of transportation (trains, highways) among other, while municipal and provincial jurisdictions may own and distribute lands articulately, although anarcho-communism may exist in some rural municipalities.

Cooperative: autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled business. Worker cooperatives are owned and self-managed by its workers. A cooperative enterprise may mean a firm where every worker-owner participates in decision-making in a democratic fashion, or it may refer to one in which management is elected by every worker-owner, and it can refer to a situation in which managers are considered, and treated as, workers of the firm. There are many variations of self-management. In some variants, all the worker-members manage the enterprise directly through assemblies; in other forms, workers exercise management functions indirectly through the election of specialist managers. Self-management may include worker supervision and oversight of an organization by elected bodies, the election of specialized managers, or self-directed management without any specialized managers as such. The goals of self-management are to improve performance by granting workers greater autonomy in their day-to-day operations, boosting morale, reducing alienation, and when paired with employee ownership, eliminating exploitation.

Collective Ownership: ownership of industrial assets or land by all members of a group for the benefit of all its members. It is distinguished from common ownership, which implies open-access, the holding of assets in common, and the negation of ownership.

Sectors
By GDP participation, the largest sector of the economy is services at 62.7 percent, followed by manufacturing and refining at 31.4 percent. Primary production is 12.9 percent.

Agriculture
In Pelaxia, the large majority of farms are in western Pelaxia. Agricultural goods represent 12% of all palmerian exports. thumb|right|Coffee plantation During the 2010’s, the Madinos administration implemented a set of policies that addressed food security on federal, state and municipal levels, the aim of which was to increase federal government support to collective farms. These policies were deepened during the Meireles administration and consolidated after the Pelaxian Revolution in 2025. In 2026, the Secretary of Social Agrarian Development (SSAD) was created to support cooperative farms and promote land reform and sustainable land development. A host of government policies and government-supported programs in the interest of cooperative farmers then emerged, where the cooperative farm is recognized as a pillar of national development. Since then, the SSAD along with other institutions were created with the cooperative farmers and other traditional communities' interests in mind where policies targeting cooperative farmers were designed to introduce market incentives, promote adequate food distribution and provide technical assistance. The principal agricultural products of Pelaxia are cattle, coffee, cotton, corn, rice, soy, wheat, sugarcane, tobacco, beans, floriculture and fruit.

Oil
Since the discovery of Kindred Sea oil in Pelaxian waters during the early 2000’s, exports of oil and gas have become very important elements of the economy of Pelaxia. With oil production peaking, disagreements over exploration for oil in the Kindred Sea, the prospect of exploration in the main land, as well as growing international concern over global warming, energy in Pelaxia is currently receiving close attention.

Oil platform over the Kindred Sea This abundant amount of natural resources within Pelaxia, has given the country lucrative revenue. Crude oil and natural gas accounted for 20% of the country's total export value in 2027. As a share of GDP, the export of oil and natural gas is approximately 11%. As a means to ensure security and mitigate the fluctuations in the price of oil, the Pelaxian government funnels a portion of this export revenue into a pension fund, the Pelaxian Investment Management Fund (PIMF). The Pelaxian government receives these funds from their market shares within oil industries, such as their two-thirds share of PalmOil, and allocates it through their government controlled domestic economy. This combination allows the government to distribute the natural resource wealth into welfare investments for the mainland. Tying this fiscal policy to the oil market for equity concerns creates a cost-benefit economic solution towards a public access good problem in which a select few are able to reap the direct benefits of a public good. Domestically, Pelaxia has addressed the complications that occur with oil industry markets in protecting the mainland economy and government intervention in distributing its revenue to combat balance-of-payment shocks and to address energy security.

Energy
As of 2027, the production share of fossil energy is around 35% while renewable energy is 65%. The electricity sector in Pelaxia relies predominantly on hydroelectricity from rivers and tidal movements. A significant share of the total electrical production is consumed by national industry.

Secondary
Most large industry is concentrated in the center and coastal areas of Pelaxia. The manufacturing industry is a significant employer of about 22% of the labour force.

Car assembly line in Jojoba

Electronics
The Pelaxian electronics and electrotechnics industry relies on heavy investment in R&D.

Metals, engineering and manufacturing
Pelaxia has an abundance of minerals, but many large mines have closed down, and most raw materials are now imported. For this reason, companies now tend to focus on high added-value processing of metals. The exploitation include nickel, tin, chromite, bauxite, beryllium, copper, lead, tungsten, zinc, gold and exportation includes finished products such as steel roofing and cladding, welded steel pipes, copper pipe and coated sheets. With regard to vehicles, the Pelaxian motor industry consists mostly of manufacturers of tractors, trucks, buses and cars.In addition, Pelaxia also produces train rolling stock.

Chemical industry
The chemical industry is one of the Pelaxia's largest industrial sectors and it produces an enormous range of products for the use of other industrial sectors, especially for agriculture. In addition, its produces plastics, chemicals, paints, oil products, pharmaceuticals, environmental products, biotech products and petrochemicals.

Public Sector
As of 2028, government spending is about 55% of the Gross Domestic Product of Pelaxia.

The roots of the socialist movement in Pelaxia were based on dangerous working conditions, exploitative labor relations policies, and the demand for collective bargaining. As socialism became part of the mainstream labor movement, it also became part of the mainstream political discourse leading up to the proliferation of a plural Marxist political rhetoric that has benefited from the general absence of charismatic leaders. The state has large ownership positions in key industrial sectors, such as the strategic petroleum sector (PalmOil), hydroelectric energy production (PalmHydro), wind energy production(StatoVentus), and telecommunications provider (TeleMercury). As an economic environment, Pelaxia's judiciary is efficient and effective. Pelaxia is highly open to investment and free trade. Pelaxia has top levels of economic freedom in many areas, although there is a heavy tax burden and inflexible job market.

Fondo de Soberanía Nacional
The FSN was set up in 2018 to underpin long-term considerations when phasing petroleum revenues into the Pelaxian economy

FSN manages the fund on behalf of the Ministry of Economy and Finance, which owns the fund on behalf of the Pelaxian people. The ministry determines the fund’s investment strategy, following advice from among others FSN and discussions in Parliament. The management mandate defines the investment universe and the fund's strategic reference index. The ministry regularly transfers petroleum revenue to the fund. The capital is invested abroad, to avoid overheating the Pelaxian economy and to shield it from the effects of oil price fluctuations. The fund invests in international equity and fixed-income markets and real estate. The aim is to have a diversified investment mix that will give the highest possible risk-adjusted return within the guidelines set by the ministry.

The fund was set up to give the government room for manoeuvring in fiscal policy should oil prices drop or the mainland economy contract. It also served as a tool to manage the financial challenges of an ageing population and an expected drop in petroleum revenue. The fund was designed to be invested for the long term, but in a way that made it possible to draw on when required.

The fund is an integrated part of the government’s annual budget. Its capital inflow consists of all government petroleum revenue, net financial transactions related to petroleum activities, net of what is spent to balance the state’s non-oil budget deficit. This means the fund is fully integrated with the state budget and that net allocations to the fund reflect the total budget surplus, including petroleum revenue. Fiscal policy is based on the guideline that over time the structural, non-oil budget deficit shall correspond to the real return on the fund, estimated at 30 percent. The so-called spending rule, stating that no more than 30 percent of the fund over time should be spent on the annual national budget, was first established in 2018.

Taxation
Tax is collected mainly from municipal income tax, state income tax, state value added tax, customs fees, corporate taxes and special taxes. There are also property taxes, but municipal income tax pays most of municipal expenses. Taxation is conducted by a federal agency, which collects income taxes from each paycheck, and then pays the difference between tax liability and taxes paid as tax rebate or collects as tax arrears afterward. Municipal income tax is a flat tax of nominally 15-20% with deductions applied, and directly funds the municipality (a city or rural locality). The state income tax is a progressive tax; low-income individuals do not necessarily pay any. The state transfers some of its income as state support to municipalities, particularly the poorer ones. The middle income worker's tax wedge is 47% and effective marginal tax rates are very high. Value-added tax is 24% for most items. Capital gains tax is 30-34% and corporate tax is 20%.