[mechanical_fish]

The main thing that local developers have in their favor is they get to partake in the evolution of thought that takes place in any long term product strategy...

Yep, that's it. It's not that the people are all that different. It's that a person twelve time zones away is a lot harder to communicate with than a person living next door. Especially if they're not from the same culture.

The cultural and distance barriers aren't impossible to overcome. But they are a handicap.

I used to work for a semiconductor company with a substantial factory in Malaysia. I'll never forget the first time I took the long, long flight to meet the engineers there. It was like removing a blindfold. You got into the factory with those folks and suddenly all their problems -- which had seemed so obscure over those damned conference calls -- became clear, and their personalities snapped into place, and you could start getting things done.

[michaelneale]

From my experience the cultural one is much worse then the distance one. Also timezone is another distance related factor - far away but similar timezone means more collaboration.