Meaning: This quote by Martin Feldstein, an American economist, highlights the relationship between relative price changes and the attractiveness of products from low wage manufacturers in Asia and Latin America to American consumers. It speaks to the impact that shifts in relative prices can have on consumer behavior and the global economy.

The first part of the quote, "An increase in the relative price of products from the low wage manufacturers in Asia and Latin America," refers to a scenario in which the prices of goods produced in these regions rise in comparison to other products. This increase in relative price can be driven by various factors such as changes in exchange rates, labor costs, or tariffs. For example, if the cost of production in Asia and Latin America increases due to higher wages or stronger currencies, the relative price of their goods compared to those from other regions may also increase.

The second part of the quote, "will also make those products less attractive to American consumers," emphasizes the consequence of such price increases. When products from low wage manufacturers in Asia and Latin America become more expensive relative to alternatives, they are likely to become less appealing to American consumers. This is because consumers tend to seek value for their money and may shift their purchasing choices towards more affordable options or products that offer better quality or perceived value for a similar price.

The implications of this statement extend beyond consumer preferences. Changes in the relative prices of goods can impact trade flows, economic competitiveness, and the overall dynamics of global supply chains. If products from low wage manufacturers in Asia and Latin America become less attractive to American consumers, it could lead to a decrease in imports from these regions and a potential shift in sourcing strategies for American businesses.

Furthermore, this quote underscores the interconnectedness of the global economy. Price changes in one part of the world can have ripple effects across borders, affecting industries, employment, and economic growth. For example, a decrease in demand for products from low wage manufacturers in Asia and Latin America could impact the livelihoods of workers in those regions and necessitate adjustments in their economies.

From a policy perspective, this quote also raises questions about the role of trade agreements, tariffs, and currency exchange mechanisms in influencing relative prices and their impact on consumer behavior. Governments and international organizations often seek to manage trade dynamics and promote economic development through various mechanisms, and understanding the relationship between relative prices and consumer preferences is crucial for shaping effective policies.

In conclusion, Martin Feldstein's quote encapsulates the intricate relationship between relative price changes, consumer behavior, and the global economy. It serves as a reminder of the complex interplay of factors that drive international trade and the significance of understanding how shifts in relative prices can shape economic outcomes and trade patterns.