This article explains the problems faced by less developed countries regarding prices. Many people assume that richer countries have higher costs of living. However, this article shows that that is not the case. The dollar simply doesn't go as far in poorer countries because of the high prices of food. The article states that "cheaper food may boost manufacturing by making wages more competitive." This would help bring developing countries up to par in their standard of living compared to prices.
https://www.economist.com/news/middle-east-and-africa/21738911-africas-economic-paradox-why-africas-poor-pay-high-prices
8 comments:
This is an interesting article that the living cost in poor countries is actually higher than rich countries. The productivity might explain that. I think that the price of products, for instance, foods, is high because the poor countries do not have enough productivity to produce foods. With the high demand and low supply, the price automatically goes high. The imported foods, however, always have high prices because of the transport costs and tariffs. Overall, because the poor countries do not have ability to produce enough goods, so that they have to rely on import, maintaining the price at a high level.
This concept is something serious to consider. When talking about economics some of us focus so much on our own economy and forget to pay attention to the less well off economies. This does however make sense because fresh food in areas that cannot grow it or support farms means there is more scarcity of food, which would cause the price to increase. The same argument could be made for clean water as well.
I find this article very interesting because, I used to believe that many urban areas in developing countries are just as expensive but relative to the incomes for those cities. However the moment these are normalized to a USD denomination many of these cities appear to cost less.Also, in many cases, I find that people in developing countries use a much higher percentage of their income on basic daily necessities (Food, Transportation, Clothes, Utilities). In relative to their salary, people from developed countries could afford much more than their developing counterparts even if the cost is high. Their purchasing power is multiple times greater than developing citizens.
This reminds me of what we talked about earlier in the semester with arbitrage. Different countries and areas have different markets for goods, and as a result they have different prices as well. In many underprivileged countries, like those in Africa, the supply of basic necessities is probably much lower than in the US, thus leading to high prices on those goods in the African countries. In general, this is just one reason why prices are different in different markets.
I think this is very interesting. I think part of this too is that many poor have to spend a significant amount of income on food. This is true even in developed countries. Contributing to this is the need to import food which I am sure takes a burden on individuals income.
It is interesting to see what people will spend their money on. It is not surprising that poorer countries have people spending their money on necessities.
I'm not surprised by the article. It makes sense that the cost of living is higher in poorer countries do to maybe a lack of resources within the country to provide necessities to its citizens
This is an interesting as I never thought about this concept before, but I also think this could also be because of mismeasurement of dissimilar goods.
Post a Comment