system
Given the following post, respond as if you're commenting on Reddit:
human
Why are things generally cheaper in poorer countries?

For example I got restaurant meals in Cambodia for like $5. I thought the reason that these countries are poor is that they are less productive meaning there are fewer goods and services to go around so wouldnt that mean everything should be more expensive?

Also I understand that the $5 restaurant meal is probably a higher % of the average cambodian income than a $15 meal is for an average american, but that still raises the question of why my income can go farther in a country like Cambodia than in America even though America is more productive.
gpt
terms to look up: purchasing power parity 

i think you touched a bit upon it in your second paragraph, $5 for a cambodian is a higher % of their income than what $15 would be for an american. part of it is straight up currency exchange rate, and the differences in those (for floating regimes or semi-floating) are due to supply and demand for that currency. the USD will be more in demand than whatever the currency in cambodia is, simply for obvious reasons like more people travel to the US and exchange goods in that currency than they would in whatever the cambodian currency happens to be.

but another difference then is purchasing power parity, which is an index to measure how much a certain basket of goods costs within any market. this basket contains non-tradeable services alongside goods, and reflects the cost of living in a particular area. with goods that you can sell across borders, you are likely to have similar prices, simply because any attempt at a lower price by one country will be met with increased demand for that country, less demand in the others with the subsequent lowering of prices (the typical supply and demand forces you see in micro environments, in a hypothetical ideal world). 

but then when you consider non-tradeable services and goods, these can't be traded, because by definition many of them are services provided locally by the local labor force. of course, with globalization you are starting to see more transfer of services between borders, especially with online education or tutoring. but things like haircuts, or restaurant meals, that require local labor? those are non-tradeable.

a meal then in cambodia is $5 because the cost of its labor is much less than in the united states. why is it that in the united states you have to pay a worker $12 an hour, and in cambodia only a $1? this is where difference in productivity come in. because america is more productive, the opportunity cost of one hour of labor is worth more simply because you have more productive alternatives. you can work in a factory and produce more value to your employer in one hour than what a worker in cambodia could do. furthermore in america you have so many options to be productive, you can enter and exit the labor force with high liquidity. there are minimum wages as a price floor for labor. an american laborer is coveted because they have the choice in working at another chain, or do something else entirely with their hour of labor. as you said, they are more productive, so they can produce more in the same amount of time. it's not just about pure labor skills (though in this case, yes, an educated and literate work force), but also technology and capital.

meanwhile in cambodia, it is less productive. they produce less in that same hour. it is not about some pure intrinsic "lesser value" but simply their work force might not have the same basic general education as the US (do they have universal K-12?) their labor might not be literate, they cant just read and follow directions to handle machinery or procedures one would use in a more advanced work force like the US. they might not have the same level of productive technologies and capital to be productive. so one cambodian worker might make much less in one hour than one in the US would. that is reflected in the wage. 

why would a cambodian accept $1 per hour? (and btw im just using the $1/hour as an example, i dont know the actual number) well if there are less opportunities, as there would be in a less productive society, then you might settle for that little. when there is less capital flow in that country, less opportunities arise, and with a large workforce? they will simply be paid less because overall they will be less productive. 

ultimately, when you think about a country being "more productive" than another, that goes for its factors of production, which include labor. and that labor is also subject to market forces, and that will differ between countries because the level of productivity differs.