Your website host's relative location plays a crucial role in how your website is indexed by Google as well as its speed and performance.
Hosting your website in your own country, opposed to another, is important in achieving heavily-weighted regional search engine results. Additionally, hosting your website locally will likely improve the speed at which your website loads. When you host locally, your website does not need to be transmitted across oceans and continents to reach your local target market.
In an ideal world, each website's servers would be precisely located in each website's target market. Regional search engine results improve even more when you can host your website in your own city or village rather than, for example, the distant capital city of your country. Search engines give more weight to local servers. However, high costs prevent that from happening in many smaller villages.
ISPs (Internet Service Providers, the companies that supply Internet connections) do not function at the same capacity world-wide, nation-wide, region-wide, or even within the same city. The cost of web hosting depends solely upon the cost of available ISPs in a country or even a region of a country. We are always at the mercy of what is available to us when dealing with Internet speeds. ISPs focus on putting high-speed Internet access in congested areas in order to target more people. So the two variables remain: what speeds are available in your location and the cost of Internet services.
Many companies falsely advertise that their hosting services are in a specific region, when, infact, they are actually from a different country all together. Even if a company is located in the UK, its actual servers may be on another continent. For instance, the US, with its wide range of web hosts and prices, is a popular choice for website hosting.
Because Internet connections are quite reasonably priced in the USA, hosting a website from the states may appear to be the less expensive option to many businesses. Having a similar hosting provider in your country might cost double or triple the price of the same service from the US. At first look, this affords good incentive to look into and across other waters for your hosting provider. However, by hosting out of your area, you automatically target a different market. Even though your website's content is written for another country, your regional search engine results may be affected because of your server's location. The savings in initial cost come at the price of lost business, particularly if you are targeting a saturated market.