In today’s world, smart algorithms—artificial intelligence (AI) and other intelligent systems—are pivotal for promoting the development agenda. They offer novel support for decision-making across policy planning domains, such as analysing poverty alleviation funds and predicting mortality rates. To comprehensively assess their efficacy and implications in policy formulation, this paper conducts a systematic review of 207 publications. The analysis underscores their integration within and across stages of the policy planning cycle: problem diagnosis and goal articulation; resource and constraint identification; design of alternative solutions; outcome projection; and evaluation. However, disparities exist in smart algorithm applications across stages, economic development levels, and Sustainable Development Goals (SDGs). While these algorithms predominantly focus on resource identification (29%) and contribute significantly to designing alternatives—such as long-term national energy policies—and projecting outcomes, including predicting multi-scenario land-use ecological security strategies, their application in evaluation remains limited (10%). Additionally, low-income nations have yet to fully harness AI’s potential, while upper-middle-income countries effectively leverage it. Notably, smart algorithm applications for SDGs also exhibit unevenness, with more emphasis on SDG 11 than on SDG 5 and SDG 17. Our study identifies literature gaps. Firstly, despite theoretical shifts, a disparity persists between physical and socioeconomic/environmental planning applications. Secondly, there is limited attention to policy-making in development initiatives, which is critical for improving lives. Future research should prioritise developing adaptive planning systems using emerging powerful algorithms to address uncertainty and complex environments. Ensuring algorithmic transparency, human-centered approaches, and responsible AI are crucial for AI accountability, trust, and credibility.