The International Monetary Fund affirms that as countries become more globalized, their economies will benefit from more job openings, trade between growing markets, and knowledge and culture transmission. The internet has been one of the most significant contributors to expanding globalization. You can now easily invest in foreign companies from your phone or have multiple cuisines in a food court next to your home. Most importantly, it has helped expand the reach of the job market. Now, companies recruit through their websites or specialized pages like LinkedIn or Indeed. Thanks to the web, one can work for a Canadian company and live in Italy. Different from the traditional 9-5 corporate job offices, remote workers perform on their schedules and in co-working spaces. According to Merriam-Webster Dictionary, depending on their lifestyles, some remote workers fall into a category denominated digital nomads – “someone who performs their occupation entirely over the Internet while traveling.”
Digital Nomadism was born of the possibility that remote jobs offer. If one has a quiet space and a good internet connection, one can work from almost anywhere in the world. Unlike remote workers, digital nomads usually don't have “a permanent home address.” They are constantly changing their location, searching for new places every couple of years or even months. One can argue that digital nomads have become actors of transnational money moments. Many keep their savings in US dollars or euros, currencies with stable market values – 60 percent of world foreign reserves are in USD. Yet, in 2023, nomads are looking to spend more time outside of their countries of origin by exploring places that are trending in social media. Most of these countries do not have US dollars as their main currency, offering an opportunity for good living standards but lower living costs. Put differently, these unstable currencies offer travelers a beneficial exchange rate.
However, while reaping the personal benefits offered by this lifestyle, digital nomads also contribute to the economic transformation of developing countries. Digital nomadism might become the new way to invest resources into “emerging” economies. Highly skilled workers moving to Asia and Latin America bring with them salaries that can push for more development but also put at risk the daily economic development of locals. In the short run, local housing markets are impacted as digital nomads rent longer-term lodgings that would otherwise be occupied by locals. The increment of capital entering the developing markets might push investment and popularity in the tourism and industry sectors. However, it can also increase the disparity between the social gaps in developing countries and set back a generation that has just arrived at the bracket of the middle class.
The Parents of Digital Nomadism: the COVID-19 Pandemic and the Rising Prices
Digital nomadism surged dramatically after the COVID-19 pandemic – “digital nomads from the US have quadrupled in the last 4 years.” As of 2023, 35 million people worldwide have reported being digital nomads with an average age of 32 years. As the New York Times explains, recent graduates prefer to have more stable jobs in the early years of their careers, building a reputation for themselves and receiving steady incomes to pay for college debt. However, younger people with more years of experience feel like they can explore further away from corporate jobs. Thanks to the pandemic, they also experienced studying and working remotely, increasing the appeal of virtual employment as compared to pre-Covid. Furthermore, support for digital nomads like special visas and co-living spaces has increased in the last year. As working online has become more common, younger people feel more prepared to leave their corporate jobs and embark on this lifestyle while still having the energy to move every six months on average.
Inflation has been another significant push factor to search for these types of jobs. Housing prices have increased 326.1 percent in the US since 1950. In 2007, the average federal debt of a US college student was around US$18,200. Today, it is around US$37,600. Younger generations see digital nomadism as a chance to reduce their living costs while affording more expensive lifestyles. They can keep their jobs at US companies while enjoying the comparatively lower cost of living in developing countries. This allows younger generations to pay back their debts and even save.
What Does Digital Nomadism Mean for Emerging Economies?
An emerging economy refers to the market and financial system of a developing country that progressively integrates itself into the global market as it experiences growth. These emerging economies have raised people's quality of life while keeping their currencies afloat. The tourism sector has often been a critical factor in the growth of these economies. For example in the Philippines, the World Bank released a statement in 2022 that by the following year, tourism would go back to pre-pandemic levels and that this increase (5.8 percent) would double the growth of the country’s GDP (2.7 percent). These emerging economies have seen growth in their amenities like Wi-Fi access, which draws digital nomads because they have the opportunity to live with lower living costs while having stable connections to the web and a digital-nomad community that supports them in their journeys.
Countries with these types of economies have taken advantage of digital norms offering visas for remote workers. These visas help boost economies because they attract people who are going to spend money within the country, while “facilitating collaboration and spurring innovation.” In other words, these short-term stays help to mobilize ideas and promote new projects. Digital nomads “contribute a global economic value of US$787 billion per year,” playing a role in transnational money transactions across the developing world.
However, digital nomads also pose essential challenges to developing countries like an increase in housing prices or a lack of availability of services to locals. Columnist Mike Elgan argues that digital nomads have nothing to do with this phenomenon. He explains that digital nomads are a minority compared to the number of people who move into Mexico City each year. In the last 5 years, 700,000 Mexicans have moved to the capital, which he suggests would explain the need for more housing and the drive of housing prices upward.
Even though it is important to point out that prices have skyrocketed due to inflation – Latin America’s average inflation in 2022 reached almost 10 percent – the prices in apartments in well-off neighborhoods have increased at a higher pace because landlords have learned that digital nomads can afford higher prices through platforms like Airbnb. The precarious situation of these economies has led to general discontent, which has only magnified with the arrival of foreigners who can afford to pay these prices. According to Forbes, alongside a study made by Restart, an estimated 90,000 people live in Mexico under the term digital nomads. The New York Times reported that locals in wealthier neighborhoods of Mexico City had not received extensions in their contracts because the landlords placed their apartments on Airbnb for digital nomads who could pay four times more in rent. People who have lived all their lives in specific neighborhoods must move because the increase in renting or buying is not affordable with their local jobs.
Hypntic Data, run by Victor Dépré, calculated a cost of living index in 578 cities around the world based on the cost of living of New York City, which is thought to be the most expensive city in the world. The New York City index was 100, so if a city has an index of 30 that means that its cost of living is 70 percent cheaper than New York City. They also account for the purchasing power of the locals in each city. This gives a better understanding to see if a town is well-off based on its living costs compared to New York City and if the locals can live comfortably due to the purchasing power. If the local purchasing power is lower than the living costs then it can be assigned as an expensive city for its local population.
In this data, we can see that most of the cities considered to be hubs for digital nomads, identified in blue, have a high cost of living compared to the purchasing powers of locals. For example, the local purchasing power of someone who lives in Los Angeles suggests that they will believe Medellin or Lisbon is cheaper, as they have a higher purchasing power than many locals in those cities This has created a huge wave of discontent from natives towards foreigners because their desire for housing in wealthier neighborhoods only drives the prices further up.
Ultimately, digital nomadism has appeared both as an option for younger generations to create the jobs that they want and as an opportunity for the developing world to bring workers who can invest more of their income into their economies. Yet, it has also created essential questions on how these emerging economies can accommodate an incoming migration of highly paid workers who can buy at higher prices than the local population. The discontent will likely keep growing as inflation keeps up and locals see that housing and food prices keep increasing. It now raises the question of how the economy might change in the developing world to guarantee the survival of the locals and the opening of doors to digital nomads when their movement into their societies is just beginning.