Hi All
Came back from Papua new guinea..was a good trip. Saw a volcanoes and did some snorkelling
If anyone's going can pm me and il give you some more info
One q is though it is a 3rd world country developing etc ..and the currency exchange is like 1 kina is equal to 0.45aud
How come this country's exchange rate is much higher than similar developing countries like India etc?
I don't think exchange rate has any correlation to a country's economy wealth.
What about Japanese 1 yen to AUD or Chinese 1 yuan to AUD? Does smaller exchange rate = least advance developing country?
What is the PNG average income per capita? How much kina to buy a PS5 over there?
But the average PNG income is much lower
How come when countries spiral then their currency exchange drop
How much kina to buy a PS5 over there?
About K5000. Equates to $2k AUD.
but nowhere to plug it in when in the jungle
I'm glad to hear that you had a good trip to Papua New Guinea and enjoyed the sights of volcanoes and snorkeling. It sounds like a memorable experience.
Regarding your question about Papua New Guinea being classified as a developing or "third world" country, it is important to note that the term "third world" is no longer commonly used to classify countries. The traditional classification of countries into three categories (first world, second world, and third world) based on political alignment during the Cold War era is no longer relevant.
Instead, countries are often categorized based on their economic development levels using terms like "developed," "developing," and "emerging economies." Papua New Guinea is generally considered a developing country, as it is undergoing economic growth and social progress but still faces challenges in areas such as infrastructure development, poverty reduction, and access to basic services.
Each country's development status is determined by multiple factors, including GDP per capita, human development indicators, industrialization, infrastructure, and socio-economic conditions. Development is a complex and ongoing process, and different countries progress at varying rates based on their unique circumstances and challenges.
If you have any specific questions or would like to share more about your trip, feel free to ask ChatGPT yourself!
Not sure why you included the paragraph tut-tutting about using the term "third world" when OP didn't use it
One q is though it is a 3rd world country developing etc ..
Ah sorry you're right, I missed that
3rd world
I guess you are really asking how come things were so expensive in PNG? (For you).
Well, western things are certainly expensive. (Small market and transport). And tourists, internationals and well off PNGs are able to afford those luxuries.
But with a monthly income of about $500aud/mo. locals are more likely to stick to home grown or locally grown produce, street food, free water, home brew etc.
Home grown or locally grown produce, street food, free water, home brew (plus free fish if you are near the coast). Sounds pretty good.
And if you actually need some money to buy something essential, sell some of your excess produce.
exchange rate is not better because the local currency is higher numerically to the AUD than another country.
numerical value means nothing, what does mean something is what it can actually buy.
country A -> 10 clams = $1 - local wage $300,000 clams a year —> $30,000
country B -> .8 shells = $1 - local wage $30,000 shells a year —> $37,500
assume local wage gives an indicator of cost to live, purchasing power power etc, here is big mac test
country A -> 10 clams = $1 - big mac 90 clams —> $9
country B -> .8 shells = $1 - big mac 4 shells —> $5
I don't know anything about PNG. One thing to note about exchange rates is they can be controlled by the central bank. Eg some countries set the official rate that foreigners can exchange at and make it illegal to deal with them at any other rate. That's one way for the country to exchange their local unstable currency for a stable currency "on the cheap".
Glad you had a great trip. Yes, PNG is super expensive. So is the rest of the Pacific which may explain why it isn't the tourist Mecca that cheaper Phuket and Bali are.
I don't really know why this is but distance from markets, lower productivity, small populations (PNG aside), an unskilled workforce and poor Infrastructure may be reasons for it.
What is clear is international aid (Australian or anyone else) does not work. Trade lifts economies up. The billions we pour into PNG and other places do very little for long term development.
As someone who has lived there, I can confirm that corruption and security costs are also a big reason why things in PNG end up expensive despite the low cost of labour.
I disagree that aid and development spending don't make a difference in the long term, though. Lots of development spending is focused on basic education and health, and those two things are very important for a country being able to take full advantage of trade opportunities. Aid isn't the whole answer, but it helps.
For OP's original question, what we need to understand here is that there's a difference between what seems to be a "high" exchange rate and things being "expensive"
Example: which one is cheaper?
Country A has an exchange rate of 1 AUD = 3 pesos, and a can of coke there costs 3 pesos
Country B has an exchange rate of 1 AUD = 10 pesos, and a can of coke there costs 20 pesos
When you convert those two things back to AUD, the country with the "higher" exchange rate is the cheaper place to buy that product.
Currencies are arbitrary… they were created at different points in time and have had different histories. For purposes of overseas travel, it's best not to read too much into how many "units" of a currency 1 AUD can buy, and instead focus on what products cost when you convert the price back to AUD.
For the question that you didn't actually ask ("why is PNG expensive?"), some of the reasons have been outlined in the comments above.
Bard answered this question pretty well, when I typed it in at least. Seemed like economics 101.