Compound interest in EU5

The graph below shows my current game of Europa Universalis V, which is my second game overall. It shows the tax base of my country, Mecklenburg, from 1337 to 1551.

And if you look at the numbers, you see that not only does the line go up, it goes up from under 10 to over 1000, so my economy has grown by a factor of over 100. As I previously explained, that is an effect of compound interest. If you calculate that hundred times growth over two hundred years into an annual GDP growth, you'll get a measly 2.3%. Measly by modern, post industrial revolution standards. Real world GDP growth is estimated to have been a lot lower in the middle ages, barely budging at all. World GDP is estimated to have grown by only a factor of 5 during the 500 years that EU5 covers. In EU5, if you "play tall" and concentrate on your economy instead of expansion, you can easily outgrow not just history, but also the AI competition. I am living the industrial revolution several centuries early.

I am not the richest country in my game of EU5. But I am the 5th richest, despite my country just being a mid-sized duchy in a historical poor part of Germany with no valuable resources. My economy is five times the size of France's. I'll be punching well above my weight in the coming religious wars. That is also because EU5 has a built-in transition in the 16th century from peasant levies to regular armies. Peasant levies are limited by your population. Regular armies are limited by your ability to pay them. EU5 has a helpful indicator on the military tab of your country, telling you how large the game thinks your regular army should be, given the size of your country. My actual army is three times the suggested size, but even in war I just spend a 6th of my income on army maintenance, and thus could easily afford a much bigger one. I'm just waiting for the next technological advance, which will make peasant levies obsolete.

A lot of weirdness is stemming from the fact that there are costs in the game that scale with the size of your economy, and others that do not. The size of your economy is the size of your tax base plus the sum of all purchase costs of your trade. So when doing a big purchase that depends on economy size, like embracing an institution, I can simply stop all trade and suddenly pay a lot less. Meanwhile costs like growing a town into a city aren't changing much over the course of the game, so the around 1500 ducats that costs were prohibitive in the early game, while now I make enough money in a year to do it twice. Why would I want to do that? Well, if you have enough money, the size of your army is then limited by your manpower, and you need towns and cities to build more of the buildings that increase that manpower.

On the one hand, it is quite fun to play this way. The the other hand, economic success leads to some outcomes that are ahistorical, unbalancing for gameplay, or both.