US government shutdown and developing countries

 

The US Government Shutdown and Developing Countries

The US government shutdown, which began on October 1, 2025, is an economic experiment and a phenomenon that developing countries must monitor and study. They must examine the economic effects of the freeze on government spending and the reduction in job opportunities resulting from the lack of government funding for salaries or various government activities. This American crisis highlights the role of government in the economy. Its importance and effective role in maximizing benefits to society through the injection of funds, whether through employee salaries or investments in infrastructure such as roads, public transportation, affordable housing, and electricity and communications networks.

The US government shutdown, which led to the dismissal of hundreds of thousands of civil servants, disrupted a wide range of programs and services provided to individuals and businesses across the United States.

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Meanwhile, police, national security, and other government personnel remained employed.

The failure of the US Congress to approve the budget has heightened concerns that this shutdown, despite the size of the counterintelligence and counterterrorism sector in the United States, will have significant consequences. This will affect this aspect... especially the FBI... and the FBI may, for example, postpone training programs for its employees or agents... affected by the cessation of funding for these programs... and security procedures in federal prisons may be disrupted due to staff shortages and guards working without pay until the budget is approved by the US Congress. Family visits for prisoners were canceled, a measure typically implemented to mitigate the impact of the shutdown.

Civil cases in federal courts related to government interests were completely frozen during the shutdown.

On the other hand, companies awaiting government tenders for maintenance or infrastructure projects suffered losses. Consequently, contracting companies working with the government also partially laid off their workers to minimize losses resulting from the work stoppage. Government agencies responsible for consumer protection also ceased operations, freezing lawsuits filed by these agencies against large corporations. This shutdown also led to layoffs of staff from agencies that protect consumers from the sale of defective or substandard products. Tax collection activities were also halted. The suspension of licensing offices for new food formulations or products is leading to losses, especially since food and beverage companies have agreements on large advertising campaigns that may be postponed, resulting in losses for marketing and advertising agencies. Immigration cases are also frozen and their resolution is delayed. This closure has also disrupted monitoring and inspection operations of facilities related to environmental affairs, which assess these facilities' compliance with pollution control requirements. The activities of the Fisheries and Wildlife Authority, one of the bodies concerned with preserving the marine environment, have also ceased.

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However, the biggest losers in this government closure are the airlines. The shortage of staff or coordinators at airports, due to staff reductions, and the shortage of air traffic controllers and security personnel at airports are contributing to flight delays. The reduction in the number of flights and the cancellation of a large number of previously scheduled flights, as a precautionary measure by airlines, are exacerbating their losses. American airlines, due to the uncertainty surrounding the end date of the lockdown, are incurring losses due to decreased passenger numbers and flight delays. The increased compensation paid to passengers for flight delays and cancellations is another aspect of these losses. The United States, with its vast resources, can absorb and manage these losses. However, imagine a developing country facing a similar problem: the parliament's rejection of the government's budget. This would lead to layoffs in numerous sectors within these societies. A government employee,

in developing countries or any other country, spends their monthly salary on basic necessities like food, drink, services, and rent. Therefore, their salary is part of the revenue generated by economic entities within the community, such as supermarkets, food and dairy companies, clothing stores, factories that supply clothing, and transportation networks. The general public... but of course, this shutdown won't last long, and any government will work to shorten its duration... because these losses will cause an increase in unemployment within American society or any other country... which will affect tax revenues... as dairy, food, and clothing factories will incur losses or experience a decrease in their revenues... due to the absence of employee salaries and consequently reduced consumption or postponement of purchasing any product until later...

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Given the size of its economy, the United States will not be significantly affected by these factors until the crisis ends. However, developing economies, which benefit from stable government operations, suffer from high unemployment rates regardless of whether there is a government shutdown. If a government shutdown were to occur in these countries, as in the United States, they would incur losses that we cannot afford.

and that  The decline in profits for businesses operating in these countries is due to high unemployment, resulting in a decrease in tax revenue for developing nation governments. Employees and workers pay taxes on their salaries, in addition to sovereign revenues such as customs duties on imported goods or fees levied on residency permits for foreigners, not to mention revenues from oil and mineral resources. This is a summary of the most important budget items for developing countries. Developing countries are required to encourage investment to create more job opportunities, thereby increasing the profits of businesses whose revenues are linked to the expenditure of salaries for employees and workers in private sector establishments that have opened due to new investments. This is in addition to the expenditures of government employees. Most developing nation governments resort to borrowing despite high revenue figures, but on the other hand, they face rising expenditures as a result of rapid population growth.  ...which swallows up any growth rates, thus increasing the budget deficit for these countries every year. The budget deficit is the difference between a country's revenues and expenditures... In addition to international armed conflicts, revolutions, and military coups, whether within the country itself or in one of its neighbors, all these factors lead to the continued suffering of the people of these countries from the persistent deficit between their revenues and expenditures.