I know this has been a huge debate over in the YPN forum, but I haven't run AdSense ads for a long time, and haven't read any of the threads in this part of the forum. I'm assuming that international clicks are paid by Google, right?
I just dont like International Clicks, they usually pay too low and when there are too many such clicks , im always very nervous about if i have been smart priced
It is based upon what an advertiser is willing to pay for those clicks. There tends to be more advertisers wanting to advertise to US/UK/Canada than many other countries, so more advertisers = higher click amounts. So the exact same page could see a US visitor earn you $1 a click, while a visitor from Germany might only earn you $0.20 a click, simply because there is more competition with advertisers for the US targeted traffic than the Germany traffic. International traffic is not less likely to convert - if it wasn't converting, people wouldn't be advertising and targeting the various international countries (or worldwide). But often, traffic from larger countries will pay more simply because there are more advertisers bidding on the keyword(s) for those specific countries.
As jenstar said International traffic is not going to convert better. What's the ROI of advertiser ? If Some one in 3rd world countries went to cafe and checked out cellular phone ads or Hot laptop ads, he probably clicked on some of the best ads of sprint and DELL but Google knows this guy in developing nation may not have means to buy these services and probably just doing a research or fullfilling his hobby and advertiser is not going to make a sale form this click so google may have discounted those clicks from international visitors. It may be high paying keyword, doesn't matter as it's not a good ROI so to protect interest of advertiser google paid less for clicks from international visitor. (It's a good thing). It's my opionion and not endorsed by google