Geo-Arbitrage
Geo-arbitrage (geographic arbitration) is the practice of economic and financial speculation based on disparities between geographic locations and different markets. The term was popularized by Tim Ferris in his bestseller The 4-Hour Workweek. Below I’ll analyze ways in which an individual could benefit from geo-arbitrage.
Digital Nomadism
The number of job offerings with a decent salary and the option of telework is increasing. Digital nomadism exploits this combination by moving to countries with a low cost of living, thereby maximizing purchasing power.
For example: a Swiss software programmer earning €60,000/year moves to Bulgaria. With the cost of living at roughly one-third of Switzerland’s (source), the same salary provides purchasing power exceeding €180,000.
Outsourcing
When hearing the word outsourcing, we often think of a Western megacompany contracting manufacturing and services to emerging countries, obtaining advantageous prices thanks to the lower cost of living and labor costs.
But outsourcing can also be a valuable resource for freelancers or individuals: for instance, the same software developer might rely on a language translator to export an app abroad; or a couple of busy professionals could hire a party planner for their child’s birthday.
In general, the goal is to delegate activities deemed secondary in order to focus better on what is most productive.