Why emerging markets pay more — and what some startups are doing about it
Four years after the Covid-19 pandemic unleashed a global inflation surge, the cost of living crisis has become a permanent feature of economic debate. Governments in the G7 spent billions trying to contain it. But for households in emerging markets, the pressure has often been sharper, more persistent, and harder to escape.
The reasons are structural. Developing economies tend to rely more heavily on imported energy and goods, leaving consumers exposed to currency swings and global supply shocks. When a local currency weakens or shipping costs spike, the impact lands fast — especially in countries where most household income goes toward essentials like food and transport.
But not all of the problem is global. A significant share comes from inefficiencies baked into local markets. Fragmented supply chains, limited access to affordable finance, and dominant intermediaries all push up final prices. The gap between what something costs to produce and what a consumer actually pays can be striking. In Pakistan, a McDonald's Big Mac Meal ordered through the delivery platform Foodpanda costs noticeably more than the same meal bought in store — a small illustration of how layers in the system compound into real bills.
Logistics tells a similar story. According to research by United Nations Trade and Development, median maritime transport costs in developing countries run roughly double those in developed economies. That premium does not just make imports more expensive — it also makes it harder for local exporters to compete abroad, dragging on growth.
Some companies see that gap as a market opportunity. inDrive, a ride-hailing platform operating across dozens of countries, has built its model around cutting out intermediaries. Passengers and drivers negotiate fares directly; the company takes a relatively small commission. Its New Ventures division is now testing whether the same logic — fewer middlemen, lower margins, more value to end users — can work in food delivery, groceries, and e-commerce across Latin America, the Middle East, and South East Asia.
Whether private sector innovation can make a meaningful dent in structural inequality is an open question. Inflation is shaped by forces no single company controls. But the everyday experience of high prices — the cost of a meal, a ride, a shipment — is often determined at the local level, by the number of hands a product passes through and the margins each one takes. In fast-growing emerging markets, reducing that friction is both a business proposition and, potentially, something more consequential.
Source:
InDrive New Ventures
A.M.
