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There exist four types of governments in Europa Barbarorum. The type of government determines which buildings are available to construct, and as a direct consequence, which military units are available to train. The government types are numbered using Roman numerals.
Type I Government: Homeland
This government represents a faction's homeland, its traditional historical territory. It is not available in every settlement, but in the settlements where it exists it allows the player to recruit the faction's best troops at the expense of being unable to train non-factional troops. It can only be built in settlements with the homeland resource as can be viewed in the city bar at the bottom of the screen. It also allows the highest level of civic buildings to be built. It is the costliest government building to create and takes ten seasons to construct.
Type II Government: Colony
This government represents a subjugated town that is generally on the border of the homeland regions. It is not available in every settlement but can be built in regions with the homeland or subjugation resource. This government building allows the player to recruit a large number of factional troops, but not all. However, it does allow the player to recruit some of the more basic, non-factional troops if any are available. It is costly and time consuming to construct, but not as much as type I government buildings. The type II government takes six seasons to construct.
Type III Government: Outlying Region
This government type represents a subjugated town that is outside the faction's historical interest sphere. This government represents the expansion of a kingdom, the beginnings of an empire. It can be built anywhere on the map. It allows for a decent building tree and a number of factional units (if available), though elite troops and most standard units from the factional roster will not be available. On the other hand, you will be able to recruit a large variety of foreign troops. The type III government is quick and relatively cheap to construct, taking three seasons.
Type IV Government: Allied Government
This government represents a region that has been allowed to remain a semi-autonomous client state. It can be built anywhere on the map and allows for a limited building tree, excluding the most powerful building upgrades, and only for the most basic of factional units. However, it is possible to recruit all kinds of allied or auxiliary troops here, including elite foreign troops that are available in some regions. Type IV also allows for the recruitment of allied generals, who serve as governors (client rulers) of type IV settlements, but can also be utilized as field generals. This government type is best for well-developed provinces from a foreign culture far away from your capital, because client rulers have important pacifying effects. It is cheap and very fast to implement, taking only one season.