"Why the prices of goods in poor countries are cheaper than that in developed countries"

This is a part of International Financial Economics course that I take this semester. It is really interesting to me since many Chinese products in Indonesia are banned by our government nowadays. Mostly because the contents are dangerous for health. For instance are candies, toys, foods, etc. Most people in Indonesia don't wanna buy Chinese product because we are affraid of its poor quality. It is a kind of slogan that Chinese product sucks.

Then my professor, a very smart and talented person, taught us in the class that prices of goods in poor countries are cheaper than that in developed countries. According to the Balassa-Samuelson Theory, it is because of the productivity of labor in poor countries is low, then the quality of the products is low as well. That is why the prices are cheap in poor countries.

Since I came here, I realized that everything is really expensive, even for Chinese products. Then I knew that the quality of the products is really good, and also you can return it if it is broken or you don’t like it, at most 3 months after you bought it and you’ll get your money back. It won’t happen in Indonesia! (“BARANG YANG SUDAH DIBELI TIDAK DAPAT DIKEMBALIKAN”. What the……).

Some Indonesian people who go abroad and find Indonesia’s product while shopping usually prevent themselves from buying it and turn it to other countries product. Now I know that Indonesian products or Chinese products which are sold abroad especially in developed countries usually have a good quality. So China sells their good quality products to rich countries and poor quality to poor countries. Next time while I go for shopping I won’t worry about the quality no matter where it was made.
Yeah…its time to go for shopping, guys!


Urbana,
February 27th, 2009