I never negotiate. it sets your score behind. Usually I focus 80% on eco and 20% on military. The military I make primarily to conquer territories.
That being said, if you want to grow as quickly as possible, you need to focus like 70% military and 30% economy. That way you conquer territories really quickly (to get land expansions), and come in first place in tournaments to get more medals (also used for land expansions). The downside of course, is that it's very time consuming to focus heavily on military.