Avid travelers know the enthralling feeling of arriving in a new city or country, meeting new people, hearing a new language, and indulging in local cuisine. But have you ever considered the long-term effects of your arrival? While the advantages typically overshadow the disadvantages, it’s important to recognize how digital nomads impact local communities.
Anthony Bourdain once said, “Travel changes you. As you move through this life and this world, you change things slightly, you leave marks behind, however small. And in return, life — and travel — leaves marks on you.”
Digital nomads typically enjoy slow travel, which allows them to connect more with the local culture and customs. They spend more money in the area, make friends with locals, and exchange ideas. Over time, the community changes—for better and for worse.
Digital Nomads Benefit the Local Economy
Starting on a high note, digital nomads impact local communities by boosting their economies. Digital nomads earn $85,000 on average per year (only 6% earn less than $25,000), according to Nomadist, and spend approximately 35% of their paycheck per month in their current city.
While they spend their money more conservatively than those on vacation, they spend much more than most locals in the area. They pay rent, shop at supermarkets, buy local crafts, eat at restaurants, take taxis, and go on excursions.
Each dollar a digital nomad spends at a local business boosts the economy of their chosen city, spreading wealth.
Additionally, if the digital nomad posts on social media, they may also raise awareness about a beautiful, unknown location, attracting future visitors and boosting the local economy even more.
Culture Exchange
Digital nomads are exposed to different customs and cultures as they travel. This unifies diverse people, increases empathy, improves personal development, and allows them to reflect on their own country and customs.
While the digital nomad is experiencing all of these benefits, so is the local community. Bringing a wealth of knowledge of different processes can mainstream previously outdated methods, open the local community’s eyes to a different way of thinking, and give them a chance to use, and improve their English language skills.
Increased Accommodation Prices
Most digital nomads practice geo-arbitrage. Geo-arbitrage, a term brought to light by Tim Ferriss in The 4-Hour Workweek, is the method of earning money in a strong economy and spending it in a weaker economy. It allows their paychecks to go further, their savings to grow, and their quality of life to improve.
Generally, the rent price is related to an area’s average income. However, when a city attracts a large number of people who earn a different (higher) income, there is more demand in the area, raising the rent price. For a digital nomad, the elevated rent price is still much less than they are accustomed to, and they’re happy to pay it. However, it’s often so exaggerated that it’s nearly impossible for locals to continue living in this area.
The difference between short-term visitors, like vacationers, and digital nomads is that short-term visitors “borrow” the space. Their visits don’t typically push locals out of their homes and neighborhoods. Digital nomads impact local communities by spending an average of eight months in one country, usually in several cities.
While rent prices in popular areas increase naturally with time, digital nomads accelerate the pace.
Loss of Culture
Mentioned earlier as a benefit, cultural exchanges have the ability to benefit everyone involved. However, if an area becomes overrun with foreigners, it is likely to slowly lose its unique culture.
Restaurants will cater to foreign tastes, clothing stores will carry different styles, and even supermarkets will begin to carry different products. Normal traditions and rituals will become more of a “show” for foreigners to gather around and enjoy instead of cultural ceremonies. As the need for English increases, native languages may become obsolete.
Tax Exclusion
This gray area has been under a lot of scrutiny recently. If a person is working, earning, and living in a specific country, it would make sense that they pay taxes in that country. However, many digital nomads live in one country, work for a business from their home country, and pay taxes in their home country. The question is: should digital nomads be double-taxed?
It’s clear that digital nomads boost local economies by paying rent, eating, buying groceries, etc., but some officials don’t believe that is enough. While some nomads travel and work virtually with a tourist visa, many digital nomad visas allow the nomad to be excluded from paying local taxes.
