The gemara doesn't end there ... it clarifies the baraita you cite and continues
Whoever lives outside of the Land of Israel, it is as if he is an
artscroll elucidates this
According to Rambam and Meiri a person who lives outside of Israel is
considered to be engaged in idol worship because he is dwelling among
and associating with idolaters [...] Living in an idolatrous country is
conducive to behavior that is antithetical to the Torah. A Jew who
resides there, even if he lives in a Jewish town, cannot help but
acclimate himself to his surroundings. By contrast living within a Torah observant country exerts the opposite pull upon a person's soul.
Rambam explains (Hilchot Deiot 6:1) that man is created in a way that he is drawn to emulate his friends and colleagues. Therefore it behooves a person to associate with righteous people and to distance himself from the wicked.
Meiri points out that any country in which wisdom and the fear of sin are common will have the same status as Israel regarding the decision of where to live.