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A Study on the Growth Strategies of Service Industry Through Vitalization of Sharing Economy

Author Park Moonsoo, KimChunkon, Koh Daeyoung, Lee Donghee, Lee Sunhak Date 2016.12.26 Page
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1. Necessity of Research  

 

Korea has been caught in a US$20,000 income trap for the past 10 years, as its per capita GNI has failed to breach the US$30,000 mark after surpassing US$20,000 in 2006. The weakening of Korea’s growth potential is primarily due to the continuation of a lackluster growth trend resulting from a slowdown in the growth momentum of the manufacturing industry. Korea has placed a policy focus on promoting the export-oriented manufacturing industry to drive economic growth and established legal frameworks to support the policy direction. However, export-driven growth strategies have high sensitivity to global economic developments and thus are vulnerable to fast-changing international trade environments. Notably, as the global economy has slipped into a structural recession and the Chinese economy is slowing, Korea’s manufacturing-driven export policies have reached their limitations. As such, the service industry has an increasingly important role to play in Korea’s economic growth. Sustainable and stable economic growth requires growth in the manufacturing sector as well as in the service sector. However, if the service sector lacks competitiveness, rebalancing the national economy toward the service sector may risk prolonging structurally slow economic growth. Indeed, Korea is facing Baumol’s cost disease in the service sector, where the creation of added value falls short of the increase in employment, impeding the overall economic growth. Accordingly, it is difficult to expect the service sector to serve as a growth engine behind the national economy. Overcoming the structural dilemma inherent in the market requires the fundamental reinvention of the service sector through disruptive innovation which changes the market paradigm itself, rather than sustaining innovation which expands the size of the service sector as it is. Accordingly, this study looked at the sharing economy as a way to bring dynamism to the service sector by addressing structural problems and as a new growth driver for the Korean economy. The study intends to present more objective growth strategies for the sharing economy by empirically and substantially examining conditions to promote and expand the sharing economy.