They aren't anymore. I've lived both in Poland and countries in western EU, Netherlands be one example, and honestly everyday product prices are very similar. The major difference is housing although Poland is very similar to Berlin housing wise, now compare the average salaries...
Right, world commodities such as oil only differ by government taxes or subsidies. And of course, oil is the lifeblood of any industrialized nation.
Anything imported (which is probably a lot for most nations) is going to be about the same. In the Philippines, a lot of cheap stuff gets imported from China that you may not even be able to find in the U.S. because it's total crap. So, that can opener might be cheap, but it won't last more than three cans.
Land prices is another big modifier. In the Philippines, rent is generally cheap even if the land is expensive. There might be a lot of demand for buying your land, but a business isn't going to pay you much for rent if it's having to work off margins from selling cheap products in an economy where most people are making less than $6 per day. The same goes for residential. Jack up your rent and the only people who can afford it are the top few percent and foreigners.
Where you save a ton in developing countries is on labor, which affects the prices of everything just like oil does. And then of course you have savings from services provided to you directly such as medical.
The difference is rent, and the net amount in your bank account. In SF rent will set you back ridiculous amounts, but only 50% of your pay if you're a developer at most. The same is true in London, and in Germany.
The difference is in SF 50% of your pay buys 20 ipads. In Germany, 50% pays for 4 of them.
Costs of living haven't been that much different for a decade or so. The only reason most businesses pay poor salaries to Polish workers is - because they can (high level of unemployment + low percentage of workers organised in trade unions + low minimum wage). Living expenses don't differ much between Warsaw and Berlin.
Programmers' wages are an exception, because - unlike most of the population - they have way out from the local labour market.
