Asian Secret #2: Geo Arbitrage

If you are American, have you ever bought medicine in Canada because it was cheaper than back home? During the housing crash, which kicked off the great recession of 2008-2009, did you buy property at bargain basement prices? The goal in these scenarios is to take advantage of disparities between markets (in different geographical locations), which is the meaning of arbitrage. This strategy is used in financial markets everyday and can be expanded into more aspects of our lives.

Companies have been taking advantage of lower labor costs in developing countries for many years and it is becoming more common for individuals to do it too. Health and Medical Tourism is a booming industry, growing particularly fast in India. According to a report from McKinsey and Co, medical tourism in India will grow to USD 2 billion by 2012. [*] And in 2007, over 750,000 Americans spent $2.1 billion on cheaper medical treatments overseas. Medical travel is estimated to be growing at an annual rate of 20%-25%. By 2017, close to 23 million Americans will travel overseas for medical treatment. [*]

Although medical tourism is becoming more and more common, its not the only way to take advantage of price differentials around the world. Increasingly, you can improve your life by getting other people to do tasks that are not worth your time. Some great reading on how to do this can be found in Tim FerrisFour Hour Work Week and A.J. Jacob’s My Life as an Experiment, in which the authors organize clever ways to outsource as many parts of their lives as possible, including “…e-mails, phone calls, shopping, arguments with [his] wife and reading bedtime stories to [his]son.

How do you shovel tasks off your plate in order to free up time?

Please let us know in a comment below.

  • The pricing discrepancies in these cheaper markets will have a huge impact on the growth shift in these industries. Say goodbye to any kind of real medical innovation in the USSA. Also, say hello to a new wave of entrepreneurial innovation in the emerging world, as entrepreneurs leverage increasingly intelligent and globally-minded workforces for pennies on the dollar.

    • Benji Ming

      Thanks for the comment, Nomad.
      It seems like medical innovation may suffer in the US, but I don’t think that’s likely. Certainly a shift is occurring away from overpriced medicine and I see that has a liberating development in America. Some, including some of my family members, suggest $175 X-rays are just a necessary evil of our healthcare industry…

      But, as entrepreneurs, we could agree that medical geo-arbitrage is a necessary and unavoidable disruption. I can’t wait to see what happens when/if US hospitals begin to compete on price for much of what’s on their standard menu.

      • You may be right. For better or worse, I’m not sure the medical industry that could compete on price has much desire to innovate. The medical field in the US is completely disorganized from what I can tell. Just go to an ER and see how difficult it is to get in; it took a friend of mine three hours to be seen despite a heart rate of 120. Meanwhile, I had a throat issue and got right in in Malaysia.

  • D.R. Fideler

    Here’s an in-depth case study of how I used geoarbitrage to create a wonderful life — not in Asia, but in Sarajevo: