Does it's location really matter? Yes and no. While it might be better to have a link from a country specific domain, a natural link from .com hosted in the same country can have just as good benefits. Often with country specific linking it comes down to who you are trying to target. If you are looking to only get traffic from your country (or local city, town, village, hut) then you should focus on websites targeted for those people in that country country. You will build natural search engine rankings for your targeted country and also any traffic that comes from the links themselves.
There is discussion on Digitalpoint Forums about the nature of origin in linking and their impact on natural search rankings. If you are targeting local or country specific local search then this subject in linking is something to consider. One of the members in thread asks: "Does it not matter what kind of site links to a .com in the US?" The user 'on-on' had a good point, often it doesn't matter for sites in the US. Some sites are kinda the melting pot of links as people try to attract any and all links to the site. This discussion could continue into link quality, link type, link location on a page, and quantifying the estimated impact of link juice, and the interaction of the anchor text on rankings to make sense of all the factors that contribute to the benefit of that link. I think its best to say that if the link is worthwhile no matter what country, it may be worth pursuing.
Discussion continued at Digital Point Forums
