The store hires locals to man it, and pays taxes at the local rates. The local currency (henceforth: lc, symbol #) can only be exchanged for foreign currency (henceforth: dollars, $) if there are things which can be purchased using the local currency that people who have foreign currency want. If the lc isn’t worth anything, nobody can make a profit buying bread for dollars and selling the bread for lc.
I think that it is overwhelmingly likely that the areas with the highest unemployment will have the lowest labor costs; If that is the case, the businessman imports wheat into that area, bakes it using local labor, and sells it in lc; he has now changed some amount of dollars into some amount of lc. He then invests that lc into a labor-intensive product and ships that product back home to sell for dollars.
Exactly the same thing can and does happen within a single currency: raw materials are shipped from where resources are plentiful to where labor is plentiful, and finished goods are shipped back out. The major hurdle is scarce raw materials limiting the number of factories that it is possible to operate, followed by political control of the economic system in order to ‘keep jobs’ within the privileged group.
The store hires locals to man it, and pays taxes at the local rates. The local currency (henceforth: lc, symbol #) can only be exchanged for foreign currency (henceforth: dollars, $) if there are things which can be purchased using the local currency that people who have foreign currency want. If the lc isn’t worth anything, nobody can make a profit buying bread for dollars and selling the bread for lc.
I think that it is overwhelmingly likely that the areas with the highest unemployment will have the lowest labor costs; If that is the case, the businessman imports wheat into that area, bakes it using local labor, and sells it in lc; he has now changed some amount of dollars into some amount of lc. He then invests that lc into a labor-intensive product and ships that product back home to sell for dollars.
Exactly the same thing can and does happen within a single currency: raw materials are shipped from where resources are plentiful to where labor is plentiful, and finished goods are shipped back out. The major hurdle is scarce raw materials limiting the number of factories that it is possible to operate, followed by political control of the economic system in order to ‘keep jobs’ within the privileged group.