ELI5, How do people and families in countries that make very little income, like less than 6 or 7 thousand US dollars per year, afford to have cellphones, tv, electricity, housing and even food? Medical care and transportation too?

Question

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In: Economics

Answer 1

A country at a different stage of economic development than the top industrialized nations has lower costs for all domestic goods and services because the prices and goods reflect what their smaller market can tolerate. If I make $6,000 per year, you cannot charge me the NYC price of $100/month for internet as that would be 20% of my annual earnings. In the poor country, the internet is likely easier to install, and is simply a line strung to the house vs. one buried several feet under concrete on a busy street. This simplicity also reflects fewer regulations and number of people and steps involved, which keeps costs low.

In terms of products made in other countries that could be too expensive (like TVs), often they will accept smaller margins or will make smaller or less advanced versions of a product that function perfectly well but reflect the price point their target consumer finds agreeable.

Answer 2

Cost of living is drastically lower. Many of the costs we in have America are inflated to match the cost of living.

Answer 3

They earn less but also things cost less (partly because people earn less and otherwise wouldn’t be able to buy them)