In a recent article, I looked at the potential for people like digital nomads to breathe new life into otherwise deprived communities. In recent years, multiple initiatives have emerged aimed at luring digital nomads to settle in new communities.
Numerous countries have responded to this trend by introducing bespoke visas catering to these footloose individuals. Portugal has been a particularly notable player in this arena, offering tailored visas and favorable tax incentives in addition to its perennially sunny weather.
Despite the scheme’s overall success, local residents have voiced concerns that it has fostered a sense of dislocation and community fragmentation. Criticisms have centered on digital nomads’ perceived lack of integration and the resultant gentrification of the areas they inhabit.
Rising living costs
Research from University College London (UCL) suggests that digital nomads might also be raising the living costs for locals too. Based on interviews and ethnographic fieldwork, the author has uncovered how the emergence of professional short-term-let landlords has contributed to the displacement of local residents from their homes.
While freelancers constituted the majority of digital nomads prior to the pandemic, the study has identified four additional categories: digital nomad business owners, experimental digital nomads, armchair digital nomads, and the rapidly growing cohort of salaried digital nomads.
The number of full-time employees working remotely, commonly referred to as salaried nomads, has experienced a staggering surge in the United States. Estimates suggest that this population has grown from 3.2 million in 2019 to 11.1 million in 2022. As a result, policymakers have begun to take notice of this exponential trend.
The impact of this phenomenon is readily visible in the transformation of urban landscapes. Chiang Mai, situated in northern Thailand, has emerged as the epicenter of the digital nomad movement. In particular, the Nimmanhaemin area, also known as Nimman or Coffee Street, has seen a proliferation of coffee shops, co-working spaces, Airbnbs, and short-term rentals that cater to Westerners earning high wages. This trend has also created economic barriers for many locals.
Priced out
Lisbon is another example cited in the research where nomads are attracted by the good weather and lower living costs. They increasingly want a lifestyle that encapsulates mobility, flexibility, and collaborative business models.
While they aren’t the sole cause, they are nonetheless contributing to the housing crisis the Portuguese capital is experiencing, however. There is also gentrification of previously working-class areas, with co-working spaces emerging to cater to the nomads. What’s more the rents in these areas are much higher than can be afforded by the average local wage.
In his acclaimed 2007 literary triumph, “The Four-Hour Workweek”, Tim Ferris, a prolific author and podcast presenter, introduced the neologism “geo-arbitrage,” which refers to the practice of utilizing one’s income from affluent nations such as the United States, Europe, and South Korea, in nations with lower costs of living.
While some individuals consider this practice an indispensable life hack, for others, it embodies the divisive facet of globalization- the belief that the entire globe should function as a free and open market. Many individuals, however, view geo-arbitrage as an unscrupulous phenomenon.
