I haven't actually done any research...

The people whose names I see listed on the right here aren't really the right audience for my questions... but I don't know who to ask. Here are some things I'm curious about. Maybe someone who reads this can point me to some sources I might use to learn more?

I want to learn more about what economists say concerning the cost of living relative to income in poorer countries. And more about exchange rates; how they’re set, how they change, their effects. It seems to me the cost of living for people in poor countries, relative to their average income, must be necessarily higher than in wealthy nations. I see this as being the result of a globalized economy.

If we consider something like an avocado or an apple, a product that is for the most part internal to the poorer economy, it might typically be the case that the real price of the apple (let’s say it’s one fifth of what it would cost in a ‘developed’ country) is about the same as the real cost of an avocado in the developed country (which, let’s assume, has an average income exactly five times that of the poorer country). In an economy that is a closed system, an imaginary world with a single currency, the currency seems to me to serve only to facilitate trade. A salary, for example, is a way of trading labor for basic necessities without the oppressive need for the employer to be in contact with those who are selling the basic needs to the employee. Let’s assume complete faith in the currency. People are certain they will be able to exchange it for goods. The value of this single currency has meaning only relative to the goods people exchange. (The value of any good relative to another is made easier to standardize through the use of currency). So whether you call a unit of this currency one dollar or thirteen billion euros, its value remains unchanged.

But let’s move back into the real world. The fruit saleswoman on the street who sells her avocado for 1/5 of what it might cost in a wealthy country doesn’t have a ‘low’ income as long as everything she purchases with this income also costs 1/5 of what it would in the wealthier country. But since you and I live together with this woman in a world where economies are not closed systems, a world of global markets, this woman finds herself paying the same amount for some goods that a person in a wealthy country, whose income is 5 times higher, pays. Thus if she pays for imported gas to drive to work, for example, she has to spend a higher percentage of her income on gas than a woman in a wealthier country. This is what I mean by her having a lower ‘real income.’ (someone correct me if I’m misusing the term). For all the same reasons –reversed – that a toy or article of clothing made in a poor country can be priced low in the United States, a toy or article of clothing made in the United States by a worker who expects and receives $10 an hour is necessarily expensive in a poor country.
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A problem that arises that I haven’t encountered much discussion of – if any – is that companies in this global economy of course wish to produce where labor is cheap and sell at the highest prices possible (prices affordable mainly to citizens of wealthier countries). Hence the situation where ‘third world’ workers make goods for first world consumers.

This makes me wonder whether one could construct a model that might indicate resources flowing from poorer places to wealthier based only on a pre-existing difference in real wages. If so, one has shown that the current economic system systematically robs the poor and gives to the rich, a state of affairs denied by most economists as far as I know.
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I mentioned exchange rates when I started and haven’t talked about them at all since, but really (perhaps due to the basic and non-economically-educated nature of my discussion?) exchange rates may be thought of as central. I’ve been using the terms “poor country” and “wealthy country” but there is nothing in my discussion that might separate these notions from “countries with depressed exchange rates” and “countries with appreciated (raised) exchange rates.” When I talk of an avocado costing five times as much in country A, what I’m really saying is that, after we convert enough of country A’s currency to buy an A-grown avocado into country B’s currency, we have enough money to purchase five avocados in country B. Similarly, what I’m really saying when I say that workers are paid one fifth as much in country B is that the wages of a laborer in country B, if converted into country A’s currency, could only buy one fifth as much in country A as it could have had the currency stayed in B’s currency and been spent in B.

So what happens if we start giving five times as many AAs (country A’s currency) for each BB (country B’s currency) when we convert BBs into AAs? Well, all activities internal to one or the other economy would remain unchanged (at least at first). The Aian avocado purchaser would just as soon stay within A’s borders and currency, because after the trip/exchange to B and BBs, his money will still only buy a single avocado, not five. An initial run through of my basic commen sense notions about how things work is telling me that this would be bad for Aian avocado buyer. Goods that used to come cheap from country B are now the smae price (more expensive, actually, after importaion costs). This might be bad, also, for the Bian avocado seller. He has lost access to a large market because his goods are suddenly, through no fault of his own, too expensive. But the Bian avocado purchaser might like the outcome. Since the foreign demand for B's avocados had evaporated, the local producer might be forced to lower his avocado prices. And the Bian avocado eater can serve guacamole 5 times a month instead of 3. Woohoo!
* Aian consumers (-)
* Bian producers (-)
* Bian consumers (+)
And what else? What have we not considered... What's the potential impact on the Aian producers if we suddenly switch to a currency exchange rate of 1:1? Well, I guess it would be easier for them to sell their avocados, without that pesky foreign ridiculously low priced competition. They might even raise their prices. Another negative impact on Aian consumers.
* Aian producers (+)
* Aian consumers, again, (-)
It quickly gets more complicated than I understand. The results are bound to be mixed among any group. Aian producers are helped in finding a market for the previously expensive goods, but they're also hurt by having to pay more for any raw matertials used in production that hare imported from B. Bian producers, while perhaps able to afford for the first time raw materials (or machinery/technology) imported from A, potentially giving a far lower cost of production, are probably also forced to lower prices to make sure all their efficiently-cultivated avocados sell, given Aian consumers have begun to buy Aian. Aian consumers, meanwhile, seem to get the short end of the stick. Goods (especially those imported from B) are more expensive. And Bian consumers seem to come out on top. Their goods (especially those always imported from A) are less expensive.

So the impact of a sudden massive equalization of exchange rates? (Igonring the fact that the importance of peoples' faith in a currency eliminates the possibility of such an action)... In my analysis, the main impacts I've been able to identify are *an equalization of the position of Bian and Aian consumers. Aians no longer have experience Bian goods as cheap, and Bians no longer experience Aian goods as expensive. The real cost of living has been equalized.
* and an equalization of industry. There is no longer cheap labor and cheap local natural resources to draw companies to country B.

*what am I missing?

Related Currency Questions:
*Is there a way around the conclusion that countries with a low-valued currency must experience higher “real” costs of living? (or, in alternative language, lower ‘real’ incomes)?
*In light of the stuffs I said, might a fixed exchange rate (as exists between the West African Franc and the Euro and which helps stabilize smaller ‘developing’ economies), serve also to perpetuate lower real wages and an outflow of resources in developing countries?
*How are exchange rates determined? When they float, what does that mean? How can a curreny's value relative to another be 'naturally' determined? When they’re pegged, who does the pegging?