Geo-arbitrage, Or How To Get The Most Of Where You Are

And not necessarily of who you are. Because that counts, you know. Where you are is just as important, or, sometimes, even more important than your amount of knowledge, your experience, your skills or your connections. The “simple” context in which you play infuences the game in ways that are not negligible.

Here are 3 simple pieces of information (I started to hate the word “tip”, that’s why I’m not saying: “here are 3 tips”) that will help you understand how this works. For simplicity, I will keep this at the individual level, meaning it will help you, as a person, but the same approach may apply, with minimal changes, to other, more complex living structures, like a family or a business.

Skill Shortage / Valuation

There are areas in which certain skills are in shortage, or they are valued differently than the area in which you live. The most popular example is programming. 20 years ago, a part of Eastern Europe (specifically Romania, Ukraine or Russia), had a big surplus of information engineers. At the same time, the Internet started to creep in in our daily lives, so many people started to use this advantage (yours truly included) by working remote, for a really good salary. There were many companies in US, or other developed countries, which where willing to pay for remote programming services, and, usually, their payout was a few times higher than whatever a local company could afford. So an entire generation of programmers started to enjoy the low cost of life in their current countries, while reaping the benefits of high pay skill.

This is still happening, by the way, and although the surface has leveled significantly, you can still get 2-3x payment rates in some parts of the worlds. There are also examples for call center services, consulting services, or even fitness / yoga services – which, along with the pandemic enforced lockdown, started to be very popular. I know of yoga teachers who were starting to make significantly more online, by streaming their lessons, than they were able to do in real life, in their home city.

Opportunity Surface

There are certain areas in the world where opportunity, generally speaking, is more abundant. This is happening for a variety of reasons, but most of the time is a combination of tradition and convenience. Here, the most famous example is Silicon Valley. Many entrepreneurs are going to California, specifically to Silicon Valley, just because they have way better chances to get funding there, than in any other area of the world. The concentration of investors, adjacent services, combined with the consistency of the ecosystem, are giving to that area a bigger opportunity surface.

But geo-arbitrage doesn’t mean simply going where the business opportunity surface is bigger, but combining whatever you feel is an opportunity for you with other benefits of your place. Geo-arbitrage may mean, for instance, that you’re living in a place which has a bigger opportunity surface for learning and education, while working some normal job, because that’s what’s important for you at that specific time in your life.

Overall Development Level

There are areas in the world which are more developed than others – I know, this is a truism, but an important one. Because the “development” may be more subtle than just economic development. There might be, for instance, areas in which the law landscape is more permissive for certain activities (from cannabis consumption, which is criminalized in some countries, but totally free in others, up to more recent relaxed Covid-19 restrictions). There might also be areas more developed in spiritual terms, like areas close to Tibet, India or shamanic centers in the Amazon. If that’s what you want, living there could be worth making sacrifices in other areas of your life – another form of geo arbitrage.

As a rule of thumb, though, the more developed, in economical terms, a place is, the more expensive life will be there, so you might choose which aspects, specifically you want to arbitrage.

The bottom line is that where you live is not inextricably linked with your source of income anymore. Even more, based on what you want at this time of your life, some areas of the world might be more important for you than others, and you can really afford now to live there, by working remotely for other areas. Covid-19 accelerated this trend, but this was already going on for some while, ever since the Internet made our remote presence a reality.

It’s worth spending some time every few months and evaluate if your current physical environment is the best place for you at this specific moment of your life.

Because if it isn’t, you can make amends very easily now.

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