Designing the Strategies for Socio-Economic Development: Science vs. Ideology

Transformation of research results into policy advice is a challenging business for economists. Most of them are often deeply disappointed by the fact that politicians and bureaucrats ignore recommendations designed to maximize the social welfare. This does not mean, however, that political decision makers are irrational. Rather, political economy argument is that they rationally pay more attention to their own interests as compared with the social welfare. The article argues that the optimal policy advice strategy should rely on the analysis of decision makers' utility functions. The outcome of this analysis is a set of recommendations that are the most economically efficient of those that can be implemented in political equilibrium.