Government-driven Sharing Economy: Lessons from the Sharing City Initiative of the Seoul Metropolitan Government

Abstract

The Seoul Metropolitan Government (SMG) has been presenting a series of public policies to promote its Sharing City Initiative (SCI) since 2012. The initiative promotes many sharing programs that are aimed at providing opportunities to those who are in need of cars and public facilities such as parking facilities, convention facilities, and public libraries. This study examines the potential contribution of information and communication technology (ICT) to sustainable development and investigates the government’s role in the sharing economy based on the SCI undertaken by the SMG. Based on selected cases, this study suggests that the sharing economy is not necessarily purely market driven but can often be promoted and utilized by governments as a policy instrument for both economic and social goals. The findings of this study demonstrate that the underprivileged could be a target beneficiary group of a sharing economy if a government specifically designs a sharing economy project like the SCI. It is also important for governments to use government funding such as subsidies to initially promote the sharing economy project as well as to establish a supportive legal framework to overcome existing laws which often constrain sharing economy activities. Governments need to establish partnerships with various stakeholders including private enterprises, social enterprises, and NGOs as well as other local governments to take advantage of the economy of scale of a sharing economy. Lastly, this study shows that a government-driven sharing economy project can help to make governments more transparent and accountable if governments actively open their data to promote a sharing economy.

Keywords

Information and communication technology sharing economy Sharing City Initiative government public services

Introduction

Recent developments in information and communication technologies (ICTs) such as smartphones and cloud-computing platforms have driven the emergence of the sharing economy as a new business model, as demonstrated by companies such as Uber and Airbnb. The sharing economy is often considered to be an alternative economic paradigm in the information age because many of the business platforms needed in a sharing economy are largely based on ICTs. The volume of the global sharing economy for five major sectors including travel, car sharing, finance, staffing, and music and video streaming is projected to grow worldwide from US$15 billion in 2014 to US$335 billion in 2025 not only in developed countries but also in developing countries (PwC, 2015). The sharing economy is mainly promoted by the private sector, particularly in developed countries which take advantage of new ICT-based business opportunities. The governments of developing countries also need to pay attention to the potential contribution of the sharing economy to economic and social development and to proactively facilitate the sharing economy for a sustainable society. However, developing countries have not been well explored and represented in studies of the sharing economy (Hira, 2017).

According to estimates released by the International Telecommunication Union (ITU, 2015), total worldwide mobile phone subscriptions were estimated at almost 7.08 billion at the end of 2015. Particularly, mobile phone subscriptions in developing economies more than doubled from 2.7 billion in 2008 to 5.6 billion in 2015, while those in developed countries increased from 1.3 billion to 1.5 billion for the same period. The penetration rate in terms of the number of mobile phone subscribers in 2015 per 1,000 people was 1,206 in developed countries and 918 in developing countries. This suggests that the gap in mobile phone penetration is not considerable between developed and developing countries, though the gap in internet usage and active broadband is still wide.¹

Although the sharing economy is not necessarily a new concept, the powerful connectivity of ICTs expedites the spread of this economy by linking those who are willing to exchange their excess resources for economic returns from those who need them. The connectivity of ICT enables reduced transaction costs when matching supply and demand by identifying and connecting multiple suppliers and multiple demanders. Compared with the past, with the rapid diffusion of online and mobile connectivity, developing countries are now better positioned to bridge the digital divide and promote the sharing economy to a greater extent.

Taking advantage of a good ICT infrastructure, the Seoul Metropolitan Government (SMG) led by a progressive mayor announced the “Declaration of Sharing City” and introduced the Sharing City Initiative (SCI) to show its interest in the sharing economy as a policy instrument. In particular, SMG considers the sharing economy to be an alternative model for sustainable development through which the city can pursue inclusive economic growth by taking care of underprivileged citizens. To promote the SCI, the city announced the Ordinance for the Promotion of Sharing City on December 31, 2012, and launched the Sharing City Promotion Committee in February of 2013. This committee is composed of both civic representatives and civil servants. The initiative is designed to provide public services to citizens, especially those who are economically and socially disadvantaged, as the mayor of SMG believes that the sharing economy can be very instrumental in solving various urban problems. In particular, the SMG is attempting to build partnerships with enterprises, non-profit organizations, and local governments to provide opportunities to those who are in need of cars and public facilities such as parking facilities, convention facilities, and public libraries.

This study reviews the SMG’s SCI to demonstrate how governments can promote and utilize the sharing economy as a policy instrument for economic and social goals and take advantage of advances in ICT. First, the significant roles of ICT in the sharing economy and the current status of ICT in developing countries are reviewed. The SCI taken by the SMG is introduced as an example of a government-driven initiative along with selected sharing economy cases. Lastly, policy implications for the sharing economy in developing countries are discussed.

ICT and Sharing Economy in Developing Countries

The growth of the sharing economy coincides with the advancement of ICT because of the unique characteristics of ICT and their economic impact. ICT often induces a chain reaction or an avalanche effect in multiplying the impact of development in whatever context it is employed. ICT is expected to play a pivotal role in transforming many resource-based developing economies in Asia into knowledge-based ones, and its contribution as a growth catalyst has been empirically proven by a series of recent studies (Deloitte, 2012; Organisation for Economic Co-operation and Development [OECD], 2009; Qiang, 2009; Qiang & Rossoto, 2009). Deloitte’s (2012) recent study suggests that a 10 percent increase in mobile phone penetration contributes to an increase of 4.2 percent points in total factor productivity, a 10 percent increase in mobile phone and broadband contributes to a 0.8 percent and 1.38 percent increase in the economy in developed and developing economies, respectively, and a 10 percent upgrade of 2G connections to 3G connections also contributes to an increase in the gross domestic product (GDP) per capita by 0.15 percent points.

Qiang (2009) reports that the impact of ICT on economic growth is greater in developing economies than developed economies and that the impacts of internet and broadband penetration are greater than those of fixed telephones and mobile phones. As Figure 1 suggests, for example, the impact coefficients of broadband on economic growth are 1.21 in high-income economies and 1.38 in low- and middle-income economies, whereas those of mobile phones are 0.60 in high-income economies and 0.81 in low- and middle-income economies (Qiang, 2009). The OECD (2009) also supports the idea that public investment in telecommunication is positively associated with economic growth, particularly during periods of economic difficulty. In the private sector, ICT contributes to economic competitiveness through productivity growth, cost reductions, innovation, and easing of geographical constraints.

The sharing economy is expected to grow in developing countries with the expansion of ICT-based economic and social transaction systems such as mobile banking, credit cards, and crowdsourcing review systems. In fact, ICT enables a developing economy to enhance its readiness for the sharing economy by making more efficient operation of the sharing economy possible in developing countries. ICT-based platforms (which match potential sellers and buyers in a cost- and time-efficient manner) are often the only options in developing countries where other mechanisms are not widely available (Farronato & Levine, 2015).

Figure 1.

Source: Qiang (2009).

Web technology particularly enables potential sellers to share information on prices and types of products and services with potential buyers that is otherwise unavailable to these buyers. Web technology helps match sellers and buyers much faster, more widely, and more economically compared with any other method, which essentially increases the efficiency of the sharing economy. This is particularly important for the sharing economy in developing countries, where the portion of the economy that is informal in nature is much greater than that found in developed countries. The sharing economy can be an excellent option, for example, for tourist accommodations in cities and towns where commercial hotels are not widely available and other options are not well known. Visitors can gain information on houses and facilities available for sharing via the web. The sharing economy supported by ICT-based platforms essentially enables many individuals who are looking for particular reasonably priced products, services, and assets that are not affordable in the traditional market. The availability of affordable assets and services attracts many young and urban residents in developing countries who have mobile and internet connectivity but are not sufficiently affluent to pay traditional market prices (Welsum, 2016).

ICT also helps to expand the sharing economy market by attracting and inviting new potential sellers and buyers to the market. Sharing economy platforms offer various types of administrative assistance such as advertisements to sellers and offer better prices to buyers than traditional sellers. In particular, small-scale companies or individuals would benefit by taking advantage of ICT as a channel through which they can reach potential buyers. Unlike large-scale companies, which have used their capital to develop good reputations and well-established markets, small-scale companies and individual entrepreneurs have limited access to traditional consumers and buyers. An ICT-based platform in the sharing economy can be an effective vehicle for small enterprises or individuals to overcome reputation weaknesses and become active players in the sharing economy. For example, many residents in favelas, slum areas in Brazil, joined the sharing economy by providing their houses and offering opportunities to enjoy local experiences to tourists who visited Brazil for the World Cup games in 2014 (Romero, 2013). ICT-based platforms for the sharing economy enabled them to be organized and take advantage of economic opportunities, particularly in a situation where hotel supply was short of demand during the World Cup games.

Considering the nature of inclusiveness and connectivity, the sharing economy is a new business model that developing countries must promote for economic development. It is even more appealing to developing countries than developed countries because it aims to maximize existing assets and resources by simply matching sellers and buyers directly to minimize transaction costs and ensure a competitive pricing mechanism. Moreover, the sharing economy is considered to be an alternative business model for those who want to bypass complicated, unpredictable or potentially corrupt governance and regulatory systems, which are often a significant administrative and economic burden to traditional large-scale companies (Welsum, 2016).

A recent report (Welsum, 2016) published by the World Bank Group reviews the current status and potential of the sharing economy and examines the possibility of its contribution to the economic development of developing countries. In addition to the critical role of ICT in the growth of the sharing economy, the report pays attention to the cultural and behavioral readiness of developing countries, particularly in terms of people’s willingness to share. Results of a global survey suggest that people in developing countries are more likely to participate in sharing resources with others than those in developed countries. According to a 2013 Nielsen poll² of approximately 30,000 internet users in 60 countries (see Figure 2), 52 percent of online consumers in North America and 54 percent in Europe were willing to share their assets. By contrast, in 78 percent of online consumers in Pacific Asia, 70 percent in Latin America, and 68 percent in the Middle East/Africa were willing. This suggests that compared with developed countries, developing countries have a more favorable cultural and behavioral environment for sharing, albeit a less favorable ICT infrastructure. In other words, potential markets for the sharing economy in developing countries are somewhat offset by a lower internet penetration rate compared with developed countries. However, the potential impact of the sharing economy on a domestic economy might be greater for developing countries compared with developed countries considering the smaller scale of GDP and higher willingness of consumers to participate in the sharing economy in developing countries (Feubli & Horlacher, 2015). The poll also suggests that there is variation among respondents in terms of willingness to share their personal assets. For example, people are willing to share electronics (28 percent) and talent and services (26 percent) more than clothing and bicycles (22 percent) (Feubli & Horlacher, 2015). These differences in willingness may affect the preference of individuals for the sharing economy model for various goods and services, which eventually determines potential size of the market.

Figure 2.

Source: Retrieved May 3, 2016, from https://www.statista.com/chart/2323/the-rise-of-the-sharing-economy/

Developing countries where the sharing economy is not well established need to consider taking proactive action to facilitate the sharing economy for the welfare of society, particularly for socially and economically disadvantaged citizens. In other words, the sharing economy is not necessarily just a business model driven by sellers and buyers who are willing to engage in this economy. Governments (rather than individuals and businesses) can promote the sharing economy to maximize the utility of available assets and resources, particularly for socially disadvantaged populations, by transforming “sharing” into “caring.” The next section introduces the SCI in Seoul, Korea, and discusses how the sharing economy can be promoted by a government to contribute to the welfare of the people and to sustainable development of a society.

Government-driven Sharing Economy: The Seoul Metropolitan Government’s Sharing City Initiative

Seoul is not only the capital but also the cultural and economic center of South Korea. South Korea has two contrasting aspects with respect to the sharing economy. On one hand, Korea is in the most favorable environment for the sharing economy because it has the fastest internet speed and is known for having the best ICT infrastructure in the world. Korea adopted aggressive policies to construct an ICT infrastructure with high penetrations of high-speed internet, broadband, and mobile phones and has been ranked in the first place in terms of e-government performance and ICT capacity according to the Global E-government Survey of the United Nations and the ICT Development Index of the ITU (2015). On the other hand, the Korean economy is led by several large conglomerates, the so-called Chaebol structure, and the sharing economy is not widely diffused in South Korea because of its strict regulatory and legal systems. For example, Uber has been banned in South Korea because of severe opposition by the taxi industry and local authorities. The government’s legislation to prohibit any private taxi service is the first formal country-level prohibition of Uber businesses (McSpadden, 2015).

Despite legal and regulatory constraints, the SMG³ has been promoting the SCI, the city’s own program for the sharing economy, particularly for the socially disadvantaged population in the city. In other words, the SMG has introduced the business model of the sharing economy as a social innovation to provide various social and public services to those who are in need. The SCI was launched in 2012 when Park Won Sun, a former civil activist, became the Mayor of Seoul.

First, the SMG publicly announced that Seoul is a “Sharing City” in September 2012. To support the initiative, the SMG enacted the ordinance proposed by the mayor and passed by the city council on December 31, 2012 to establish a legal framework to support private businesses and civil organizations that are engaged in the sharing economy. The ordinance aims to promote sharing activities not only in the ICT-based sharing economy but also in any sharing activity that creates social, economic, and environmental values by sharing assets, goods, information, talents, and experiences. Extending the concept of the sharing economy, the SCI was introduced to solve social problems through sharing. The SMG also designated 64 qualified non-profit organizations, small- and medium-sized businesses, and civil organizations as either “sharing enterprises” or “sharing organizations” that are eligible for administrative and financial assistances provided by the SMG.

Once an organization is selected and designated as a sharing enterprise or sharing organization, it is likely to obtain a reputation of government approval and increased credibility, both of which are significant assets in promoting a business. However, it was not initially easy for the SMG to prepare legal and institutional frameworks to advance the SCI because existing legal and institutional frameworks were not exactly favorable to the sharing economy. To implement the SCI, the SMG first reviewed existing legal systems and identified various legal and institutional barriers that were detrimental to introducing the initiative in different functional areas such as transportation, tourism, taxation, parking lots, food industry, insurance, and construction (Table 1).

Table 1.

Barriers to Sharing City Initiative and Improvements Needed by Area

Functional Area	Improvements Needed	Existing Regulations
Transportation	Easing regulations on the ban on commercial transport services by private cars	Article 81 of Passenger Transport Service Act
Tourism	Easing registration requirements for urban private room rental business, that is, accommodation size (230 square meters)	Article 6 of the Enforcement Decree of the Tourism Promotion Act
Taxation	Exempting taxes on religious facilities when they share space to the public	Article 50 of the Restriction of Special Local Taxation Act
Parking lots	Exempting taxes on on-road parking lots when they share space to the public	Article 10 of Parking Lot Act; SMG Ordinance on the Installation and Management of Parking Lots
Food industry	Easing regulations on restaurants when they share space to the public	Article 37 of the Food Sanitation Act
Insurance	Developing an insurance plan to offer safety guarantee to users	New insurance plans needed
Construction	Promoting sharing practices in architectural design	New regulation needed

Source: Korea and Jung (2015, p. 43).

With consistent and aggressive efforts to overcome identified legal and institutional barriers, the SMG convened numerous public hearings and worked with legislators, citizens, and various stakeholders to determine reasonable alternative solutions. For example, the SMG persuaded residents to share their designated on-street parking lots by offering reduced parking fees, which required a change in Article 10 of the Parking Lot Act and the SMG Ordinance on the Installation and Management of Parking Lots (Korea & Jung, 2015).

Second, the SMG employed a collaborative governance approach to effectively implement the SCI. As mentioned previously, the SMG designated 64 partners as private and non-profit agents of the sharing economy in the city based on their capacity and goals. The designated partners had to meet the minimum qualification that they should be involved in the sharing economy at least for three years. Each partner is designated as an agent of a particular program of the SCI and is eligible for approximately US$20,000 in grants from the SMG for their activities. As of 2015, 60 of these partners were still involved in sharing programs in different areas such as: (i) facilities and spaces, (ii) experiences, talents, and knowledge, (iii) goods (tools and toys), (iv) education, (v) arts, (vi) lodging, (vii) clothing, (viii) books, (ix) cars, and (x) photos, videos, and music. In addition, there are many private enterprises and organizations that participate in the sharing economy platform organized by Sharehub, which is an official portal for the SCI created by the SMG.

As of 2015, there were more than 150 enterprises and organizations, including 60 designated by the SMG, for sharing services, data, and goods with those who need them in various areas. Table 2 summarizes the areas of sharing economy programs and the number of participating enterprises and organizations which are certified by the SMG in each area. The participating organizations include private enterprises, social enterprises, and NGOs, among others. In terms of the number of sharing programs, the number of facility-sharing programs (44 enterprises and organizations) is the highest, followed by gift- or talent-sharing programs (28) that enable people to share various services using special skills, talents, experiences, and knowledge. For example, Spacesquare (http://spaceshare.kr/main) is an online space-sharing company that promotes space sharing for meetings, parties, workshops, seminars, and art exhibitions. Spacesquare attempts to link those who have excessive spaces with those who need spaces for various activities and programs. LABO (http://www.labo.or.kr) is another example of a space-sharing internet platform that facilitates cultural exchange with international visitors, particularly young people. The SMG considers LABO to be an important partner because the homestay opportunities it provides connect host families who have excess lodging space with others who are interested in learning about Korean culture and language.

Table 2.

Numbers of Enterprises and Organizations Certified by the SMG and Participating Enterprises and Organizations in Sharehub

Areas of Sharing Economy	Number of Enterprises and Organizations in Sharehub
Facilities and Spaces	44 (18)
Experiences, talents, knowledge	28 (10)
Goods	18 (11)
Education	13 (3)
Arts	10 (4)
Lodging	9 (5)
Tour information	6 (2)
Clothing	6 (2)
Public information	5 (0)
Books	5 (1)
Cars	4 (3)
Photos, videos, music	3 (1)
Total	151 (60)

Source: Author’s own.

Note: Coded and compiled data from the official website of Sharing City Initiative of SMG (www.sharehub.kr). In parenthesis is the number of enterprises and organizations certified by SMG.

Jaenunnet (http://www.jaenung.net/) is an online service company for talent- and service-sharing businesses that matches potential service providers (computer skills, translation, computer programming, and so on) and service buyers similar to Airbnb, which matches those looking for lodging with those who have extra rooms.

Third, in addition to the partnership with private and non-profit partners, the SMG also invited strategic collaborations of 25 district governments in the city by assessing their participation in the SCI and providing financial subsidies worth approximately US$500,000 for district governments’ sharing economy initiatives. With continued effort by the SMG, 20 district governments made similar district ordinances to promote the sharing economy by allocating financial resources and providing administrative assistance to participating enterprises and organizations. Many district governments have built collaborative relations with the SMG to maximize a synergistic effect for various sharing economy projects. For example, the SMG’s initiative for sharing parking lots would not be successful without the active participation of district governments, which have many public parking lots within their administrative jurisdictions.

Fourth, the SMG also runs the Sharing Economy Startup School, which is designed to encourage and educate potential business and social entrepreneurs. The program, launched in 2013, provides technical and management consultation to those who are interested in the sharing economy. For example, SMG provided the Sharing Economy Startup School five times in 2013, and 29 and 31 sharing economy entrepreneurs graduated from the school in 2014 and 2015, respectively (Korea & Jung, 2015). SMG also began to educate young social economy entrepreneurs through the Young Startup School program, in which 275 middle school students from 11 middle schools participated in 2015 (Korea & Jung, 2015).

The next sub-sections discuss selected programs that have been introduced and implemented as part of the SCI: a car-sharing program (Nanum Car), a public facility-sharing program, and a public data-sharing program.

Case 1: Nanum Car-sharing Program

The Nanum car-sharing project is an SCI project that spreads across different districts in a short time period. Starting in February 2013 with 492 cars in 292 designated car-sharing centers (Ko, 2015), five private car-sharing companies participate in the Nanum car-sharing program. Three of the participating private companies use environmentally friendly electronic cars, and two companies use gasoline-engine cars. Over the last three years, the number of cars increased from 492 to 2,675, and the number of car-sharing centers jumped from 292 to 1,202 in less than two years (SMG Division of Transportation Policy, 2015). The number of members of the Nanum car-sharing program increased from approximately 60,000 in 2013 to approximately 800,000 members in 2015. As of December 2015, approximately 4,000 citizens used the car-sharing program daily, and between 2013 and 2015, 1.9 million citizens used the car-sharing program (SMG Division of Transportation Policy, 2015).

According to a report by the SMG Division of Transportation Policy (2015), 83.7 percent of members were in the age group of 20–30; in fact, actual 85.5 percent of car-sharing users were in this age group. The average rental time was 3 h and 23 min, and the average driving distance was 42 km, which indicates that the Nanum car-sharing program is a good option for young citizens who do not want to own cars but need them for temporary purposes. Moreover, 32.8 percent of total users used the program during weekends, and 32.1 percent of total users used the program late at night when public transportation was not available.

To promote the Nanum car-sharing program, the SMG made proactive efforts. First, it improved the accessibility of the Nanum car-sharing program by enabling citizens to pick up and park a car in public parking lots in the city. In fact, the SMG enabled participating companies to use public parking lots for free as an incentive. As of the end of 2015, the Nanum car-sharing program is available in 89 city public parking lots and 240 district government public parking lots (SMG Division of Transportation Policy, 2015). The SMG also proposed a collaborative business model by enabling citizens to use the T-money pass (the city’s public transportation debit card) for any car-sharing companies such as Green Cars, Socars, City Cars, and Han Cars, joining the Nanum car-sharing project. The SMG also offered a discount rate as an incentive to those who used the Nanum car-sharing program after using public transportation.

Table 3.

Nanum Car Sharing as Tool for Public Services

SMG Transportation Service	2013	2014	2015	Total
Transportation vouchers for community activities	1	4	22	27
Transportation vouchers for microenterprises	11	51	204	266
Transportation vouchers for physically disadvantaged	16	356	648	1,020
Transportation vouchers for low-income families	54	312	400	766
Transportation services for voluntary organizations	13	11	7	31
Transportation services for start-up businesses		84	37	121
Transportation services for newly married couples (wedding car service)		9	9	18
Transportation services for those who sell cars	2	66	128	196

Source: SMG Division of Transportation Policy (2015, p. 6).

The SMG uses this program as a social policy tool to provide transportation assistance to socially and economically disadvantaged people. The SMG particularly provides transportation services to low-income families, physically disadvantaged individuals, and microenterprises by offering transportation vouchers for the Nanum car-sharing program. For example, Socar, a participating company, offers a US$10 monthly voucher to disabled people and their families as well as low-income families who have lower than 60 percent of the average national income (Ko, 2015). The SMG also provides transportation vouchers to newly married couples and those who are selling their cars (see Table 3).

In addition to its contribution to social welfare, the Nanum car-sharing program helps to make the city more environmentally friendly by providing an alternative to buying a new car. According to user satisfaction survey results,⁴ 2.4 percent of users answered that they sold their cars after they used the car-sharing program. Ko (2015) suggests that each shared car replaces for 3.5 personal cars, which means that approximately 7,000 cars have been replaced by 2,000 cars participating in the car-sharing program. In Ko’s survey, approximately 50 percent of the respondents said that the primary reason for using the car-sharing program is an economic one. For users, sharing is often more cost efficient than owning a private vehicle or taking a taxi because there is no lump-sum investment in personal vehicle purchases or maintenance, but they can use shared cars like their own personal vehicles for particular purposes. The results also suggest that most users appear to be satisfied with the service quality of the Nanum car-sharing program, with an average score for overall satisfaction of 4.01 on a five-point scale. Particularly, users are satisfied with the convenience of the car-sharing system (4.26) and business hours (4.08) and less satisfied with the user fee (3.22), car-sharing centers and number of cars (3.48), and car maintenance (3.55) (Ko, 2015). This suggests that the SMG needs to expand the program and improve the availability of the car-sharing service. This goal is set to be pursued by the SMG in the second phase of the Nanum car-sharing program starting in 2016.

Case 2: Public Parking Lot-sharing Program

Similar to the Nanum car-sharing program, a public-parking-lot-sharing program (PPLSP) is another major program implemented in collaboration with district governments and private businesses. This is a parking lot version of Airbnb, which aims to share parking lot information and link those who are looking for parking lots with those who seek economic returns for their available parking spaces. The SMG and district governments have been promoting PPLSP to maximize the utility of existing parking lots in the city because the availability of parking lots is a long-standing problem in business and residential areas in the city.

Because of the increasing number of cars, the demand for more parking lots was a pressing issue to the SMG. While high-rise apartments often have sufficient parking spaces, residential areas, where houses are grouped together, experience serious shortages of parking spaces because many houses do not have their own parking spaces. To deal with this problem, the SMG introduced a resident parking permit system for residential areas and later provided financial assistance to those who demolished their fences to construct parking lots. Despite the partial success of the resident parking permit system and financial support for parking lot construction, the SMG still had a serious parking lot shortage problem, which made the SMG turn to PPLSP, a sharing economy solution.

Many citizens are interested in this program because it is often challenging to find parking lots in Seoul. Although there are 3.8 million parking spaces in the city, supply and demand do not match well. Responding to the parking problem and SCI, Parking Lots for All (Modu-eui-Juchajang) developed an app by collecting parking lot information from governments, businesses, and NGOs. The app service is available via smartphones. Those who are looking for parking in a particular area can check the availability of a parking lot, check the parking fee for the lot, and pay via credit cards. They can also compare parking fees, location, availability of handicapped parking spaces, and the styles of parking lots (garage, open space, and so on). Availability of all types of lots is easily and conveniently known because the app provides parking lot information by distance or fee (Zagmaster, 2016). Once a parking lot choice is made, the app provides a navigation service to the space via mobile navigation apps.

To promote PPLSP, the SMG offered financial and administrative assistance to potential participants of the program. The SMG actively encourages those who have parking lots to participate in the parking-lot-sharing program by offering financial incentives and provides grants of approximately US$25,000 for construction and improvement costs for parking lots to building owners who are willing to share their parking lots with residents after regular business hours (between 6:00 p.m. and 8:00 a.m.). The SMG also offers US$20–30 per lot for a monthly incentive. To those who do not need any financial assistance for parking lot construction and improvement, the SMG pays a doubled monthly incentive for each lot.

Case 3: Public Facility and Good-sharing Programs

Similar to PPLSP, the public facility-sharing program (PFSP) is also another major program implemented in collaboration with district governments. Facilitating the reservation program for places such as sports facilities and parks, the SMG introduced PFSP in 2012 to enable citizens to use more than 1,000 facilities managed by the SMG and district governments. Approximately 100,000 citizens used city or district facilities in 2014 through the PFSP (Korea & Jung, 2015).

Similar to the Airbnb platform, Kozaza (www.kozaza.com) particularly aims to match those who want to stay in traditional Korean houses (hanok in Korean) with those who own homes in the hanok style and are willing to share their unused rooms for economic return. Kozaza established a partnership with the SMG in 2013, and it strategically targeted a hanok-sharing program because the Korean government was interested in conserving hanok architecture, which has been replaced by high-rise apartments. Thanks to the policy interest in hanok conservation, Kozaza easily started its business model with financial and administrative supports from the SMG. Kozaza has been quite popular with many foreigners who want to have a true Korean experience during their visit, and it helps the SMG to solve the problem of the shortage of hotel rooms in Seoul.

In addition to the sharing of cars and spaces, the SMG promotes the sharing of goods such as toys and clothing with those who are socially disadvantaged such as youths or low-income families who are not able to buy such goods. For example, The Open Closet (www.theopencloset.net) collects donated dresses and rents them to those who need formal clothing for interviews and special events such as wedding ceremonies and birthday parties. According to the information from its website, The Open Closet has more than 1,000 formal outfits and rents them to more than 2,000 people who need formal outfits for various reasons.

Case 4: Public Data-sharing Program

The SMG echoes the initiative of Government 3.0 by the Park Geun Hye administration, which has promoted the values of openness, participation, sharing, and collaboration and has particularly made concerted efforts to make data and application programming interfaces (APIs) open to the public. Through the open data portal (www.opengov.seoul.go.kr), the SMG actively provides citizens and enterprises with public data in various areas, including public health, housing and urban planning, transportation, and public safety.

The SMG’s effort in public data sharing has been effectively promoted thanks to the high penetration of smartphones and widely available mobile broadband, which enable citizens and businesses to obtain digital public information at almost any time and place. The SMG even took a WiFi-sharing initiative, which was designed to expand WiFi access to citizens within the city boundary with a collaboration of telecommunication companies and district governments. The SMG provides citizens with the location of free WiFi zones in Seoul on a free WiFi service app.

With better ICT connectivity and continued efforts through the Open Government Initiative by the SMG and central government, service app developers have begun to pay attention to public data and developing service apps available to the public. This is an example of crowdsourcing production in which citizens or non-governmental actors generate public services in collaboration with governments to provide citizens with the necessary information for public services. The SMG has continued to make efforts to share public data through the Open Data Plaza (data.seoul.go.kr) (Korea & Jung, 2015). For example, the app service for Parking Lot Sharing for All was developed because the SMG and district governments shared public parking lot data to the public through data-sharing. Public data-based service apps developed by citizens or businesses are a good example of crowdsourcing production. For example, IamSchool is an app developed by IamCompany to provide class or school announcements and school activity-related information to parents so that they can check lunch menus, assignments, and class activities in real time. Using the public information provided by the Ministry of Education, school district offices, and schools, the app provides information to parents who are interested in checking their children’s school- and class-related information on their mobile phones (Moon, 2016).

App developers also attempt to combine public data and public APIs with private data and private APIs to develop integrated public service apps and make them available to the public. For example, ODSay is a transportation service app developed by an app developer (www.odsay.com) to provide free schedules of subways, city buses, express buses, trains, and bullet trains. The app includes schedule information services for both public and private transportation, combining private transportation services with public transportation services developed by local governments (Moon, 2016).

Parking Lots for All was also developed, thanks to the SMG’s effort to open and share public parking lot data. Parking Lots for All provides an app service by merging information that is transmitted from both public and private parking facilities in real time.

Conclusions and Policy Implications

The sharing economy has recently advanced more drastically in developed countries compared with developing countries. Thanks to connectivity driven by ICTs, sharing economy business models have been widely developed and adopted in areas where multiple suppliers and multiple consumers can be matched for mutual benefits. Sharing cars, lodgings, and home appliances are some examples of sharing economy benefits.

Although the sharing economy is naturally evolving as an innovative business model in the private sector, as observed in the cases of Airbnb and Uber, it can be promoted and driven by governments in addition to private enterprises, particularly when a government is interested in using the sharing economy model as a policy tool to satisfy social and economic needs. In fact, sharing economy services are not necessarily new to even developing countries, where similar services have existed in an informal manner and been embraced by many people (Welsum, 2016). The sharing economy becomes increasingly appealing to developing countries because they are rapidly catching up with developed countries in the penetration of mobile phones and internet usage. Developing countries can use the sharing economy model to maximize the utility of existing resources by matching excess resources with those who need them as well as to promote a caring and sustainable economy by aiming at specific target groups and public services.

Focusing on the SCI taken by the SMG, this study shows how governments can use the sharing economy model as a caring economy model for better general public services as well as the socially disadvantaged population as SMG demonstrated in the Nanum car sharing program. The sharing economy model can be further developed to become an innovative model for economic growth beyond social development. While the sharing economy has significant potential for both social and economic development in developing countries, selected cases in the SCI offer several policy implications that can be considered by developing countries that want to take advantage of the sharing economy model. First, the SMG actively promotes SCI programs such as the Nanum car-sharing program and parking lot-sharing program because of well-established ICT connectivity in the city. For example, the parking lot-sharing program enables citizens to easily identify available parking lots in real time and navigate to the selected parking lot through a linked navigation system. The success of the program relies on effective and timely provision of information on parking availability and reasonable parking fees to parking lot seekers via a mobile phone app. This suggests that the high penetration of mobile phones and promotion of high connectivity are a critical precondition to the sharing economy model. The SMG’s public data-sharing initiative was also aggressively introduced and successful because of the excellent ICT infrastructure of the city.

Second, a government needs to establish a supportive legal framework to facilitate and promote the sharing economy model because many existing rules and laws are not necessarily favorable to sharing economy activities. To strategically promote the sharing economy model, the SMG modified existing rules and often enacted new rules for promoting the sharing economy.

Third, it is very important to build partnerships with private enterprises, social enterprises, and NGOs as well as other local governments that are willing to participate in government-driven sharing economy programs and run business models despite business risks. This is especially appealing to many social enterprises and NGOs that are more interested in the welfare of socially disadvantaged people than in the maximization of their economic gains.

Fourth, government funding is often critical to the effective initiation of a sharing economy system when a society is not quite ready for the sharing economy. The SMG’s grants to participating enterprises and NGOs were quite instrumental in nurturing the market for the sharing economy by ensuring demand. In the case of the Nanum car-sharing program, the SMG’s voucher program for the low-income and disabled population created demand, which helped to moderate the high risks of the car-sharing business.

Fifth, it is important for a government to promote transparency and openness by making public information available to the public. In addition to sharing goods and services, sharing government data is an important part of the sharing economy because private and social enterprises can develop public service apps using public data. Public service apps can be an important model of cooperation between government and non-government actors for public services. As observed in the case of Parking Lots for All, the sharing economy model can be further promoted by a government’s effort to open public data and information to the public.

We argue that developing countries must pay increasing attention to the sharing economy model not only for economic development but also for sustainable and inclusive development using the sharing economy for social objectives. As noted in Welsum’s report (2016), the sharing economy is also a model that enables people to bypass formal regulations and corrupt governance systems that often impede new businesses and entrepreneurial activities. The sharing economy also enables people to enjoy affordable services and goods such as cars, houses, facilities, and tools, which may otherwise be prohibitively expensive in a regular market in developing countries. Learning from the SCI taken by the SMG, developing countries need to explore the sharing economy as a new model not only for economic growth but also for inclusive and sustainable development by actively supporting the model with institutional and financial supports and working to overcome various challenges such as the social trust system and ICT infrastructure that are bases for the sharing economy.

Footnotes

Acknowledgements

This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2014S1A3A2044630).

Notes

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