The “sharing economy” is a system in which people share resources or services — from homes to cars — by renting them from one another, typically via apps and websites. It has become increasingly popular in developed countries over recent years. But what advantages could this system bring to international development?
“In effect, what we’re looking at is the power of new technologies to connect us to one another directly,” April Rinne, a sharing economy adviser, told Devex. “We can transact directly with one another, rather than going through that centralized intermediary — namely a company or a government — or in the case of global development, an international aid agency.” Rinne said that “If people can meet more and more of their needs through their phone, we don’t require some kind of central intermediary to interact with. This unlocks all kinds of assets, all kinds of talents and skills, all kinds of opportunities.”
Rinne defines the sharing economy as decentralized networks of people connected through new technologies — the key, she says, is that it is about access to resources over ownership of them. Based in Portland, Oregon, she works with clients around the world to help the sharing economy realize its full potential.
When she started in her work on the sharing economy — having moved into the field from microfinance and social enterprise — she did a round of meetings with international development banks, foundations and other organizations focused on global development. But while there was some interest, she said, she also encountered resistance — particularly when their models had been built around a consumption-based methodology.
“Once have a bed, once you have a TV, and ironically once you own a car, for a lot of people, you’re no longer considered poor,” she said. “The sharing economy challenges a lot of these initial assumptions because ownership is no longer the goal.”
Some global development organizations are starting to explore the sharing economy, claiming it has the potential to drive positive outcomes in income generation and economic development. For example, Dalberg, a global development consultancy, has conducted a study demonstrating how these markets could benefit most from the growth of the digital sharing economy — from addressing underemployment to improving access to finance. But across the development sector, the transition from tagline to transformation on this issue has been slow.
Part of the difficulty is access to the technology that enables much of the system and coordinates peer-to-peer markets.
“The digitally enabled, technology enabled sharing economy requires very high levels of digital access and literacy,” said Rinne. “That will be mostly in developed markets, where more people can afford the tools and technologies we need to make this work.”
Having said that, sharing economies in developing countries long preceded the rise of products and platforms that connect people via online transactions, she explained. This sharing of assets has traditionally been out of necessity or culture, as opposed to choice.
While Rinne’s focus began in developed countries, she has since expanded to clients in emerging markets, taking on engagements from Bogota to Nairobi. In Colombia, for example, she worked with Compartamos, the country's social innovation organization, on how the sharing economy could boost local entrepreneurship and on collaborative use of space in social housing as part of urban growth.
Cities are natural starting points for sharing economy policies, she explained, because they have the density of things and people to share. The sharing economy can intersect with smart cities and civic innovation.
“At the intersection of smart cities and the sharing economy is the role of the individual and the role of the human relationship,” she said.
The focus on technologies that make cities more efficient and transparent can risk automating people out of the picture, she said. The sharing economy puts the individual at the center of the strategy with its emphasis on peer-to-peer markets. In conversations with clients, Rinne introduces the concept of the “sharing city” — the application of the sharing economy to the urban environment.
“In a smart city where everything is determined by a digital grid, individual human agency is basically left out,” she said. “Cities that understand the advantages of technology but that at the end of the day focus on bringing people back into closer relationships with one another — in other words, seeing technology as a means to an end, rather than an end in itself — are more successful and truly reflect sharing city principles,” she said. “A sharing city is also a smart city, it is also a sustainable city, it is also a resilient city by its very nature because of the benefits a sharing economy provides.”
Various cities are conducting pilots around the sharing economy, but it has been mostly ad hoc — for example, looking at shared use transportation, rather than an overarching, integrated sharing city strategy.
But awareness of the sharing economy is growing among policymakers, she said, and it is now incumbent on the global development community to take notice and action.
Over six weeks, Devex and our partners will explore what it takes to build a successful smart city, how climate resilient and environmentally friendly infrastructure and technologies are being implemented, and how actors in the global development community are working together toward common goals and engaging local communities in an inclusive way. Join us as we examine what it takes to create our smart cities of the future by tagging #SmartCities and @Devex.
Catherine Cheney covers the West Coast global development community for Devex. Since graduating from Yale University, where she earned bachelor's and master's degrees in political science, Catherine has worked as a reporter and editor for a range of publications including World Politics Review, POLITICO, and NationSwell, a media company and membership network she helped to build. She is also an ambassador for the Solutions Journalism Network and the Franklin Project at the Aspen Institute.
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