Hi, so I am from the US, but I have been in Latin America most of the last year (mi español está mejorando rápidamente), and like most people from the US here I enjoy my greater purchasing power for many things. Going out to eat, for instance, vastly cheaper. But this isn’t so for everything; although I haven’t been looking at it so closely, I believe a lot of electronics, for instance, aren’t particular cheaper, and may actually be more expensive, in many places here. It seems to me like some other goods, like clothes, may vary widely, with some types or brands or whatnot being more or less expensive than what I’d expect back home, though don’t plan any international shopping on that basis, since I can’t say I’ve looked at clothes all that hard.

At any rate, it seems like some things are more sensitive to cross-country price changes, and others less so. What are the usual economic explanations for this? My general guess has been usually it’s a matter of how local versus global are the inputs into the product, so that, e.g., local foods that are largely produced using local (cheaper) land and local (cheaper) labor end up costing less in real terms, whereas something like an iPhone seems to be produced in a vast global supply chain, and the inputs into it are pretty much the same whether it ends up in New York or Lima, so maybe that wouldn’t be as heavily affected by price differences absent taxes or other such things. In particular, labor intensivity might seem a big determinant; perhaps the biggest price-oriented life difference I’ve been feeling is that, while here, I’ve been taking Spanish and tennis and piano lessons, each multiple times a week, for a fraction of what it would be anywhere in the US, and of course these things are essentially all labor. Something big and important like housing might also fit, insofar as housing in the US is being produced with local materials and land and labor that starts out with a higher cost, though perhaps also housing is especially enmeshed in local politics (like whether the local homeowners successfully restrict construction of new housing).

Of course this wouldn’t serve as an explanation of why some economies are overall more expensive or less so, since it’d be entirely circular; saying the US is more expensive because (especially) labor and land and other inputs in the US are more expensive. But my question is, given historically-generated difference in things like wages among different countries, what are the main economic explanations not for some countries being more or less expensive, but for certain categories of goods and services being more price-sensitive to those differences?