Is digital nomadism a threat to economies and societies?

Expat news
  • digita nomad in a cafe
Published on 2022-09-05 at 10:00 by Asaël Häzaq
Estonia, Croatia, Germany, Costa Rica, Cap Verde, Brazil, Ecuador, Cyprus, Mexico, Portugal, United Arab Emirates, etc. The list of countries issuing digital nomad visas keeps growing. While these new workers kept a low profile some years ago, they are now revolutionizing the labor market. Covid has propelled them, and thousands of workers are now moving abroad to combine a comfortable lifestyle with their professional careers. But who benefits from this new way of working? Locals are clenching their teeth as they face what they call “an invasion.”

What is a digital nomad?

Behind the term “digital nomad” emerges a new relationship between work and society. Digital nomads are people who only need a good internet connection to work. They can work from anywhere they wish. The boom in digital nomadism goes hand in hand with the reopening of borders after lockdowns, governments' policies to boost economic growth and the new expectations of many workers.

Digital nomadism is in full swing

Salary is no longer the only factor in professional fulfillment. Employees are now giving mental health and wellness as much importance as technical skills and productivity. These two last factors will, in any case, become higher if employees feel happy in their job. Companies are now more aware of workers' new expectations. Yahoo Japan, Amazon, Microsoft, Airbnb, Johnson & Johnson, Adobe, American Express, Meetic (a French dating website), Mozoo (a French digital advertising company), Rev (an American speech-to-text company), IIek (a French green energy provider), etc. The list of companies (especially large corporations) open to teleworking from abroad is becoming even longer as new digital nomad visa programs are being launched.

Self-employed people or freelancers are also feeling the pull of life abroad, especially as countries are launching more initiatives to facilitate their settling down. Estonia, a pioneer in digital nomadism, even offers a business-creation program that is 100% online. Countries that are trying to attract digital nomads hope to become more popular destinations and reap economic benefits. But are these economic spinoffs really helping local populations?

Digital nomads versus locals

In Mexico, the message is increasingly loud and clear: “go away.” On social media and on the street, more and more Mexicans are expressing their outrage against digital nomads (mainly Americans), a pattern that they see as a form of neo-colonialism. Some foreigners even hesitate to call themselves “expats,” aware that the word (coined in the 19th century by colonists to differentiate themselves from immigrants) is still loaded. The “expat” is seen as a privileged person belonging to a certain social group. The behavior of some foreigners does indeed seem to match this definition of privileged expats.

The wave of Americans moving to Mexico at the moment seems motivated mainly by the low cost of living there, while poverty threatens the local population. Currently, over 40% of the population lives below the poverty line. Digital nomads change the environment in which they settle down, starting with housing prices. In Mexico, housing prices are soaring. It's the same in Portugal, the United States, and Thailand.

Digital nomadism: A boon or a constraint for the local economy?

But all foreigners should not be tarred with the same brush. Foreigners who had moved to Mexico before the digital nomad boom have nothing to do with these 5.0 newcomers. They immigrated out of love for the country, the language, and the culture. They are well assimilated into the culture and live like locals. 

Digital nomads rarely work for the country to which they immigrate. Their income comes from elsewhere, so they don't need to learn the language of their host country for professional reasons. They band together in “expat neighborhoods” with fast internet and all the necessary facilities. They import their culture, language, and habits and evolve far from the problems of the rest of the country, which remains, in their eyes, a picture-perfect postcard. It's difficult to talk of integration or assimilation in this scenario.

Is it necessary, though, to call into question the positive impact of digital nomads on the tourism industry? NomadX is a company that creates digital nomad villages around the world. One village was created in Madeira, Portugal. Another village is underway in Brazil. According to NomadX, the Portuguese project could bring 30 million dollars annually to the economy (with 6000 digital nomads registered in the program). But how does this money trickle down into the local economy? Do locals truly reap the benefits?

The responsibility of governments

If digital nomad villages are able to come to life, it's, of course, because they're encouraged by local governments. In their race to revive tourism, few governments are considering the long-term, medium-term and long-term impacts of digital nomadism. Mexicans and Portuguese, who are being forced to leave their neighborhoods because they can no longer afford the rising rents, are suffering every day from the adverse effects of the influx of this new type of tourists.

This is even more true when we realize that these nomadic foreigners are only there for a limited amount of time. The very principle of digital nomadism is extreme flexibility. You can work wherever you want to. You live wherever you want to. The increase in digital nomad visas doesn't encourage them to settle down indefinitely in a given country, but on the contrary, encourages them to roam across various countries to make the best of their advantages without being affected by any of their constraints. Digital nomads don't need a permanent address. Their positive impact on the local economy must be put into perspective unless we are reasoning within a vacuum and imagining digital nomad villages with rents that are too high for locals, businesses and services tailored only for digital nomads, again at prices too high for locals, who only come to these villages to serve the tourists, without being able to live there. A vision very far from real immersion in a foreign country.