Galactic Civilization's II has a very interesting economic system, which is at once complex and simple. It will, of course, be necessary to understand all aspects of the economy in order to play as effective as possible, but to defeat the clever AI on even medium settings, you'll first need to understanding the basics of taxes and production.
Your income is largely based off taxes. The more citizens you have, the more tax revenue you will receive. Anyone who has played a turn-based strategy game already understands this concept. And because Gal Civ 2 uses a tax-based income model, the assumption that more is better applies. In general, it is better to have a larger population, it is better to have a larger number of economic buildings, and it is better to have more planets. There are some restrictions to this assumption, the largest of which is that overcrowded planets incur morale penalties, and these penalties can eventually become so severe as to undercut the benefit you receive from having a larger taxable population. But generally speaking, you'll want to make sure your planets are reaching their population caps quickly, that you're aggressively trying to acquire new planets, and that you're aggressively building economic structures.
The second important fundamental however, is that production costs money. This is a concept that is not always used in turn-based games. Many of the Civilization games, for example, use a system that keeps industrial production and economic revenue more-or-less separate. This isn't the case in Gal Civ 2, because every unit of production must be paid for out of your economic revenue. There are three units of production, those beings Military (Spacecraft), Social (Planetary Improvements) and Research (Researching Technology). No matter which unit of production you're speaking of, putting ten units into production will consume 10 galactic credits (there are important exceptions, mentioned later). This means that your industry is dependent completely on your economy. You can have a thousand factories, but they will produce nothing if you don't have the taxes needed to use them.
Therefore, the general basis of all economy in Galactic Civilizations II is this: find a balance which allows you to increase your revenue as much as possible, so that you can produce as much as possible. If you are experiencing a shortfall in revenue, then you re-balance your economy by reducing production. But obviously, such a strategy will need to be temporary - otherwise you'll find yourself falling behind your enemies.
