The talk of Addis Abeba all about debt crisis in the US. Showcasing the elitist debate on budget deficit, it highlighted the irony of development. In the developing world where compromise is expensive, technicality is scarce and production capacity is low, an agreement on raising the national debt burden would always be politically driven. As politics is often hypnotised with trivial concerns of loyalty, such a deal will be far off. The resilience of US politics has shown the world that such a deal would be possible only if technicality is preferred over political patronisation.

The world has seen fierce policy debate, over 11 hours long, on the national debt burden and subsequent economic implications of the global superpower, albeit anxiously. The long awaited deal of pushing the debt ceiling up brought a breather for the global financial market. The political imperative of the agreement was, however, more important than its economic significance, at least for Ethiopian policy makers.

The high debt burden of the US economy is principally a result of a mismatch between consumption and production. The state of development that the country has reached drives mass consumption. Disproportionally bulged financial markets support this consumption by extending overrated loans. Since the state owns considerable amounts of the overvalued loan burden, through its ownership of too-big-to-fail banks, the contagious disease of transferable debt has engulfed it to the extent of critical crisis.

Broken partisan politics was also equally restraining within the overall debt debate. It even goes to overwhelm the academic discourse of unemployment reduction. While leftist economists suggest that debt accumulation is the preeminent threat for the national economy, rightists claim that unemployment is more urgent than the amounting debt burden. However, both groups agree that American production capacity is able to shoulder both of them, if not about priorities.

Disasters are perceived along with their impact and might not be important for ordinary citizens in New York, Tokyo or Addis Abeba. It could even be felt as just another political stage show. Nevertheless, it could transcend a fairytale to affect individuals in each of these cities across the world.

Cheap production in China is subsidised by high end US consumption. The dollar remains the major reserve currency, and stable global trade is possible if only its denominated economy is managed well. Any instability in the US economy would, therefore, be affecting the tradability of dollars. Certainly, the global production process, including that of China, would considerably be affected.

Had other countries been self-sufficient producers, such disequilibrium would have no impact on them. As reality dictates, however, the utopia of production self sufficiency does not exist, even in closed economies such as Cuba and North Korea. Any volatility in the US economy would proportionally be felt by a Japanese automaker, a Chinese manufacturer and an Ethiopian trader. The debate could only be about intensity and magnitude of impact.

Residing in the global manufacturing powerhouse, the Chinese manufacturer is highly dependent on the trade balance between China and the US. The Chinese government owns much of the American debt, and its profitability would heavily depend on the exchange rate between RMB, renminbi, the Chinese currency, and the dollar. In evidence of the Chinese understanding of the problem, the US debt deal was one of the most viewed parliamentary sessions in China.

The trader in Merkato, the largest open market in Ethiopia, was equally worried. Any slump in Chinese productivity would affect the trader’s total transactions. Certainly, the price of imported consumer goods would also increase as the supply would be highly restrained. As China remains the major source of consumer goods, factors that would affect its productivity and cost would hurt Ethiopian traders and consumers.

No different is the case for the Japanese automaker. A drop in American demand would push profit down. So far as cross subsidisation is vital for the industry, in which the lofty profit from high end consumers subsidises lower end consumer, the decline in demand drives prices up in other countries. Unlike other industries, however, the impact on the high-tech sector would be enormous as most of the global production line is designed to serve upper class Western customers.

In recognition of the market interconnectedness, the world had provided attention for the debt deal. As news on the deal spreads, global financial markets gained momentum. Manufacturers opened their doors for more delivery orders. Traders across the world rush to ink the best deal. Consumers were also relieved of employment insecurity.

Across the world, the deal has sent a strong message for policy makers, politicians, business people as well as ordinary citizens alike. Any agreement has a cost. The world of politics is full of compromises. Agreements are valued on the basis of results not processes.

The lessons might be taken differently by a Chinese bureaucrat and his Ethiopian colleague. Likewise, the grasp of the deal by a Chinese manufacturer and his Ethiopian client will also vary. What remains true however, was that the deal has saved them all from a foreseeable crisis.