Abstract
This study examines the link between selected indicators of a circular economy, including essential components of environmental and economic growth. Developed economies are continuously innovating to promote growth and giving governmental support to the producers to move from linear economies to circular ones. Hence, waste materials in industrial systems are recycled or re-used, improving the efficiency of using finite resources with the no-waste approach. The aim of this paper is the following: (1) to identify the main components of a circular economy, which are also supportive of sustainability and development; (2) to check the impact of these variables in the economic growth of European Union countries; (3) to find out if the three components of sustainable development adopted to circular economy (CE) indicators (environmental–social–economic) are significant to economic growth. We used a fixed effect panel data analysis to identify the circular economy’s impact on the economic growth of European countries. Additionally, to support the results of the regression analysis, we employed a second method—generalized methods of moments—computing the Arellano–Bond dynamic panel data estimation method. The model included five independent variables, such as environmental tax rate, a recycling rate of waste, private investment and jobs in a circular economy, patents related to recycling, and trade of recyclable raw materials. The identification of each variable was made based on a deep search through literature. The results of both econometric models showed a strong and positive correlation between a circular economy to economic growth, highlighting the crucial role of sustainability, innovation, and investment in no-waste initiatives to promote wealth.
Highlights
The circular economy (CE) is perceived as a crucial model for industrial economics to pursue sustainable development [1,2,3,4,5]
∆gdpi,t = ∆gdpi,t−1 + α1∆logtaxi,t + α2∆logreci,t + α3∆loginnovi,t + α4∆logtradei,t + ∆ i,t where: i = used for a number of countries t = used for time ε = used for the error term ∆gdp = used for gross domestic product ∆logtax = used for environment tax revenues ∆logrec = used for recycling rate of municipal waste ∆loginnov = used for private investment, jobs, gross value added related to CE * patents related to recycling ∆logtrade = used for trade-in recyclable raw materials when computing the Arellano–Bond dynamic panel data estimation method, we found similar results with the FE method
We defined CE as an economic system operating at micro-meso-macro levels, focusing on the 4R of reducing, reusing, recycling, and recovering materials in production–consumption activities, aiming to achieve sustainable development, enabled by business model innovation and responsible consumers, and supported by the quadruple helix collaboration
Summary
The circular economy (CE) is perceived as a crucial model for industrial economics to pursue sustainable development [1,2,3,4,5]. CE is acknowledged “as a solution for harmonizing ambitions for economic growth and environmental protection” towards the constraints of the take–make–use–dispose linear economy [6] In [7], it is claimed that “CE provides a reliable framework towards radically improving the present business model towards preventive and regenerative eco-industrial development as well as increased wellbeing based on recovered environmental integrity” Value co-creation among these actors is a critical part of the viability of this economic model, which is expected to have a positive impact on the community’s social life, the economy‘s sufficiency, and the natural environment [9]. The CE approach has been guided by the [10] study, where the earth is depicted as a circular, closed system with limited resources, in which the economy and environment should exist side by side
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