Galactic economy

Interplanetary commerce formed the backbone of the galactic economy. While planetary trade could sustain local economies, advanced societies often depended on interplanetary exports to finance the substantial economic interactions and large-scale exchanges they required. Although some planets possessed their own shipping capabilities, the majority relied on sizable freight companies, such as Xizor Transport Systems, or freelance haulers to transport their goods along major hyperlanes.

Around 350 BBY, major transport and commercial entities coalesced to form the Trade Federation, aiming to enhance efficiency, advocate for pro-trade legislation, and regulate prices. The Trade Federation's influence over the galactic economy was potent enough to negatively impact several planetary economies following its debacle at Naboo.

Despite the Imperial Period ushering in significant increases in governmental oversight and centralization of economic processes, it greatly impacted the galactic economy, primarily because inflation was practically nonexistent. According to the official manual for Imperial military officers, the Imperial Handbook: A Commander's Guide, this was attributable to two key factors: the New Order permitted corporate competition, thereby establishing the Corporate Sector where open mercantilism could flourish without intervention, and simultaneously, they aimed to ensure that companies allowed their coffers to be used for the greater good, and therefore, established corporations like TaggeCo, Kuat Drive Yards, and Santhe/Sienar Technologies, were nationalized by the Empire so their engineers could contribute to the Empire's prosperity.

Seemingly, the demise of the Trade Federation and the subsequent acquisition of its assets by the Galactic Empire created a vacuum that smugglers filled to meet the robust demand for shipping that the Federation and later Imperial controls had generated. Smugglers thrived during the Imperial era, operating either independently or as part of larger organizations led by figures like Jorj Car'das, Quelev Tapper, Talon Karrde, or Booster Terrik. Following the rise of the New Republic, many smugglers affiliated with the Smugglers' Alliance, which sought to coordinate smuggler and hauler activities.

Hyperdrive technology enabled the development of a galactic economy, supported by a standardized currency and the common language of Basic. Prior to hyperdrive technology, exploration and trade were often confined to nearby star systems, simply because the vast majority of star systems were separated by many light-years. The need for self-sufficiency meant that few planets developed specialized economies before the emergence of the galactic economy.

Droids were essential to the galactic economy and were programmed for various tasks, including construction, excavation, repair, piloting, maintenance, mining, and other forms of labor. The benefits of employing droids included their ability to function in inaccessible and hazardous environments that most sentient species could not, as well as not requiring compensation or other benefits that biological sentients would.

Despite being prohibited by the Republic under the Galactic Constitution, slavery persisted in lawless regions such as the Outer Rim and even covertly in areas closer to the more civilized Core. A case in point is the Republic-controlled Telos IV Citadel Station, where a Twi'lek dancing girl was held as an indentured servant due to another's gambling debt. Slavery, although outlawed in the Republic, was heavily frowned upon by the time of the Battle of Naboo, as demonstrated by Padmé Amidala's shock at Anakin Skywalker's enslavement.

To effectively compete within the galactic economy, numerous planets opted to concentrate their economies at the planetary level. Planets with a valuable natural resource would prioritize its export, while other less fortunate planets would find success through economies of planetary scale. Entire planetary surfaces were often dedicated to grain cultivation, droid and engineering manufacturing, or mineral extraction, significantly impacting planetary climates. These were common in regions like the Corporate Sector. This became especially prevalent during the reign of the Galactic Empire, when large-scale military production was occurring.

However, other planets (particularly in earlier times) deliberately opted for what could be termed non-specialization. Small-scale farming was the ideal. Herding and hunting also occurred. Instead of focusing on mass export, they prioritized self-sufficiency, relying heavily on imports to meet their non-agricultural needs. In some respects, these worlds could be considered similar to more impoverished systems, but in reality, they served as the perpetual consumers that more developed systems existed to supply.

Although countless firms participated in commercial transactions, only a select few major galactic conglomerates wielded substantial influence over the galactic economy. Some galactic firms employed millions of individuals across thousands of worlds, serving trillions of consumers. During the final millennia of the Galactic Republic, commercial interests began to form guilds to amplify their influence on relevant legislation and enhance efficiency. While most of these guilds, such as the Techno Union and the Commerce Guild, dissolved after the Clone Wars, many surviving members gravitated toward the Corporate Sector Authority.

Many planets operated stock exchanges and banks, but these institutions rarely extended their influence beyond their local star system. Many banking institutions that served clients beyond their local area stored their collateral on Aargau or Muunilinst. Major interstellar banking institutions included the Bank of the Core, the InterGalactic Banking Clan, the Galactic Banking Network and the InterGalactic Bank of Kuat.

The galaxy utilized thousands of different currencies. It was common for a planetary economy to operate using multiple currencies, including planetary credits, credits from a dominant power within the sector, or credits issued by a galactic government.

Numerous major governments produced credit chits, but credit chips were also widely used. These debit-based systems facilitated electronic transactions through interchip exchanges. Metal coins were commonly used for local currency, although galactic governments were known to issue commemorative metal coins, such as the Victory Tax Credit or Decicred.

The Galactic Republic's dataries were perhaps the most ubiquitous form of currency. Due to the Republic's broad membership, dataries were accepted on nearly all planets. The Galactic Empire and the Rebel Alliance each backed credits that were accepted across member worlds, and occasionally on non-member worlds. The constant power struggles between these governments and the varying levels of support for them caused the value of their currencies to fluctuate wildly from system to system. The establishment of the New Republic presumably stabilized the galactic economy. The economy practically collapsed during the Yuuzhan Vong War. Immediately following the war, the Alliance initiated extensive reconstruction efforts throughout the galaxy, through the Reconstruction Authority. The Authority was tasked with endeavors such as re-terraforming Coruscant and finding a new homeworld for the Ithorians and other species that lost their homes to the Vong and more.

Under Republic law, all wage-earning individuals were required to pay income tax. This tax was collected by the Republic Tax Collection Agency. When the Trade Federation voiced concerns about piracy in the outlying star systems, the Republic Senate imposed a tariff on those previously free trade zones. This action understandably angered the Trade Federation Viceroy, prompting him to blockade and invade the small planet of Naboo. Shortly before the [Clone Wars](/article/clone_wars-legends], a fifteen percent transit tax was levied on all tickets sold in an effort to generate emergency funds for the government. After the Galactic Republic transitioned into the Galactic Empire, tax laws were consolidated into the Imperial Revenue Codes and placed under the control of the Imperial Taxation Bureau.