> What makes the social contract local?
You're asking questions that have been discussed at length by philosophers, and while there is no definitive "answer", there are some thought frameworks you can think in. Questions of ethics are hard because they're dependent on culture, and their axioms do not stem from nature (although a few philosophers claim they do) but from human psychology and social-psychology. Still, they're not completely arbitrary. You can say your values make you prefer ethical framework A over ethical framework B, but each framework -- while may not 100% logically sound and 100% consistent -- at least frames the discussion.
So, to get back to your question, there are certainly reasons -- within a given ethics framework -- to prefer local responsibility. The reasons start with the question, "why do I have a responsibility towards the Other[1]?" Some philosophers (like Levinas[2], I think), take a very total approach. Others may say that the responsibility stems from relationship and mutual influence (my wellbeing is affected by the Other, and the Other's is affected by mine). If you prefer the second approach, it is clear that you have greater responsibility towards those whose lives are more affected by yours and vice-versa, and as mutual effects can travel through the economy or legislation (you both vote for the same government), and those are local, it stands to reason that the measure of responsibility grows with locality. Other ethical frameworks may agree with this notion of locality in principle, but say that locality only takes precedence when the needs are the same (of the local and remote), but if the remote person/community has greater needs, then that takes precedence over locality.
All of these can make sense, and different people can subscribe to different ethical frameworks. But each of them has to be consistent, or at least have good reasons for breaking the consistency in some circumstances.
[1]: https://en.wikipedia.org/wiki/Other
[2]: https://en.wikipedia.org/wiki/Emmanuel_Levinas