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Gradually decreasing would help a lot. You would have priorities to capture some lands first for example. I suggest morale increase in that territories can be associated with productivity increase

The penalty for Capturing a new territory is too high. I think 50-60% could be enough. This makes it impossible for smaller countries to gain resources. You are just stuck at what you have at the core. Which makes it impossible to win. And sometimes capturing a new territory only causes less resources.