[thewisedude]

The thing is, I would say the cost of production of Coke is less in India too. In other words, even though I believe price arbitrage happens, I dont think that would be the main culprit.

I would say the lower standard of living in a particular country puts the country in a good vantage position to export more goods (or services). For eg:- A person from a developing world might be in a good position(financially) when he decides to return to his home country for good, even if he has saved what an American would call "not much".

Now, I think true globalization which means (tariff free import and export of all goods including groceries) might eventually solve this problem. But before that happens- that might eventually mean a hard life for people currently living in the developed world.