I think you might want to be careful with how you phrase this, because my first impression is that you were asking about a specific kind of history known as 'local history', which focuses on limited areas (a city, province, etc.) instead of national or transnational narratives. It's actually really interesting and often provides a level of nuance that traditional national narratives, often dependent on the writings of officials in the capital, don't shed much light on.

If the question, as I understand it, is whether natives to a region or country are the best sources for it, the answer is 'not necessarily'.

In the 20th century a good many great historians specializing in Spain were actually Englishmen; Raymond Carr, J.H. Elliot, Henry Kamen, etc. Their work in turn was widely influential among Spanish historians who reworked their approaches to take into account the research and theoretical issues tackled by these English historians. Now, there was a special context for this. Spain was under Franco and there wasn't exactly a great deal of space or allowance for potentially subversive reinterpretations of history, which stifled history produced at home and instead opened doors to reinterpretations from abroad.

A similar phenomenon happens with Cuba, despite a good number of great Cuban historians living and writing on the island, like Oscar Zanetti Lecuona. History on the island has generally been very tightly controlled by institutions and individuals interested in the politicization of history as a tool in a larger political debate vis-a-vis the justification of the Cuban Revolution and Cuban sovereignty generally in the face of the threats from the US. As such, many of the best historians specializing in Cuba are actually doing their work abroad or are foreign born; Louis Perez Jr. (not actually Cuban), Alejandro de la Fuente (Harvard, self-imposed exile), Marial Iglesias Utset (Harvard, emigre), etc.

Another point that is key to understand is that historians from abroad often have insights and an edge against native historians of a given country due to resources. Again, I point to Cuba. A historian in a tenure position earning 50k or more a year and backed by institutional support for his/her research has an edge against third world historians in Cuba with limited access to up to date bibliography, constant economic challenges, limited to non-existent institutional support, etc.

Native historians always have certain advantages that you can't simply buy, of course. Their knowledge of the language, familiarity with the culture (especially issues which may not have found their way into more traditional narratives), etc., do give them a certain edge. However these advantages are often overwhelmed by the many difficulties that third world countries (or countries with limited academic freedom) have.

Foreigners also have the slight advantage that is being outsiders. Without a particularly strong bone to pick, they can sometimes more fairly assess issues which contemporaries and natives can't touch without a series of ingrained prejudices or blindspots causing difficulties.

Yes and no I would contend, and in large part it comes down to access to sources that might be well known or common in only one language for instance.

We can look to a few instances where distance from the topic was both helpful and a hindrance.

The first is Western Study of the IJN and specifically here the Battle of Midway. For many decades the West was sorely lacking in good Japanese sources on the battle, and relied on ones such as the captured "Nagumo Report" important but still only a limited and inaccurate at times AAR captured and translated during the war. And the works of Mitsuo Fuchida who because of his conversion to Christianity and learning English was very popular as a source in the West. And his claims such as the IJN 2nd strike being moments from launching when the US struck, play to the high drama and a clean and nice popular image of the battle.

That then is what is used for what is one of the definitive American works on the Battle, Gordon Prange's Miracle at Midway from the early 80's. But in that time something had happened in Japan.

Fuchida had been discovered to be basically full of crap, with additional obscure and little known or forgotten sources beginning to creep across the Pacific. You had then in the following years works such as Lundstrom's First team begin to challenge the West's assumption on the battle.

But it wasn't until 2005 with Parshall and Tully's Shattered Sword that the West truly caught up and in some ways produced the definitive Japanese account of the battle, using obscure sources from both sides of the Pacific (for instance the recovered sortie logs for all 4 IJN air groups, and the battle logs of the USS Nautilus) and a helping of new personal accounts.

So in that case for many years the West was behind those in Japan who had a much clearer idea of what their guys were doing in the battle.

Now the reverse we can look to the Royal navy in the first decades of the 20th Century. For this time there are basically 2 seminal historians, Arthur Marder, and Stephen Roskill.

Marder was an Ivy League academic from Boston, who spent most of his career teaching on the West Coast and Hawaii. Roskill was a career Naval officer who even saw action with the RN in the South Pacific.

Marder mainly focused on WW1 while Roskill wrote the official history of WW2. But they had many clashes over the interwar period.

But they also ended up producing first rate works, but with different takes. The Royal Navy is famous for how miserly it is with records, and opening up of archives. Thus Marder time and again had to beg, borrow, or steal to get access to sources, but could write with a looser tongue as he was not part of the Establishment. Roskill meanwhile was more bound to toe the official line, as he helped decide what it was, but could more easily back it up with documents at times.