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As a Canadian E-Marketing Manager, I have worked as a Canadian sub-division of large American companies, and a Multinational Marketer for the International head office for a Canadian company. Since Canadians speak American (I mean… English) the question about whether or not a Canadian site should be exists, when there is a perfectly good American site, frequently comes up. I am sure that this is encountered in other regions of the world that share languages as well.

The main reason why you want a local site is if you can offer something that no one else can offer.  The first question that you have to ask is "would my users and/or advertisers benefit from having a local site". Reasons can include:

1. Advertising space is limited. For example, on a high-traffic site, Canadian advertisers can be drowned out by American ones.
2. Product offerings differ by country. A central site does not account for differences in distribution or customization by country. This can frustrate users who keep seeing what they can’t have.
3. Local content is useful. In my experience, I have seen a lot of effort put towards creating local content, with rarely a reward. One good example of local content that I experienced was Canadian healthcare cost savings case studies, since our healthcare reimbursement system is dramatically different from the US, it made sense to have local studies instead of leveraging theirs.
4. Regional Languages. Sometimes languages differ by region. Anyone who has tried to create one site for Quebec and France understands this (French is a very rule-bound language, but it is not only one set of rules!)

Ultimately I believe that one day new technologies will obviate the need for local sites. For example, advertisements, content and product offerings could be served dynamically depending on the location of the IP address (or language settings), modified slightly to account for regional language differences. For now, this is still an important issue.