The resilience of public policies in economic development

Once we had developed a model of policy prioritisation, we were equiped to study a variety of topics through counterfactual analysis. Our first study looked at the problem of whether a set of goals remains feasible after an exogenous shock reduces the expenditure capability of the government. This work became very relevant as we entered the Covid-19 pandemic and governments around the world had to cut down expenses. It allowed us to develop the first formal metric of policy resilience.

This paper studies the resilience of public policies that governments design for catalyzing economic development. This property depends on the extent to which behavioral heuristics and spillover effects allow policymakers to attain their original goals when a particular policy cannot be funded as originally planned. This scenario takes place, for example, when unanticipated events such as natural disasters or political turmoil obstruct the use of resources to advance certain policy issues, e.g., infrastructure or labor reforms. Here, we analyze how the adaptive capacity of the policy-making process generates resilience in the face of disruptions. In order to estimate the allocation of resources across policies, we employ a computational model that accounts for diverse social mechanisms, for example, coevolutionary learning and network interdependencies. In our simulations, we use a data set of 117 countries on 79 development indicators over an 11-year period. Then, we calculate a resilience score corresponding to each development indicator via counter-factual analysis of policy disruptions. Next, we assess whether some development strategies produce resilient/fragile policy profiles. Finally, by studying the relationship between policy resilience and policy priority, we determine which issues are bottlenecks to economic development.