# How do governments determine policy priorities? Studying development strategies through spillover networks

## TL;DR

This paper introduces a network-based political economy model to help governments identify effective policy priorities and resource allocations, considering interdependencies and country-specific contexts.

## Contribution

It develops a novel framework modeling development indicator evolution as a game on a spillover network, integrating political economy factors and empirical data from over 100 countries.

## Key findings

- Country-specific contexts significantly influence policy effectiveness.
- The model explains the correlation between corruption and development.
- Provides a new tool for tailored development strategy advice.

## Abstract

Determining policy priorities is a challenging task for any government because there may be, for example, a multiplicity of objectives to be simultaneously attained, a multidimensional policy space to be explored, inefficiencies in the implementation of public policies, interdependencies between policy issues, etc. Altogether, these factor s generate a complex landscape that governments need to navigate in order to reach their goals. To address this problem, we develop a framework to model the evolution of development indicators as a political economy game on a network. Our approach accounts for the --recently documented-- network of spillovers between policy issues, as well as the well-known political economy problem arising from budget assignment. This allows us to infer not only policy priorities, but also the effective use of resources in each policy issue. Using development indicators data from more than 100 countries over 11 years, we show that the country-specific context is a central determinant of the effectiveness of policy priorities. In addition, our model explains well-known aggregate facts about the relationship between corruption and development. Finally, this framework provides a new analytic tool to generate bespoke advice on development strategies.