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Abstract
In this paper, we develop a methodology for studying the sustainability of the circular economy model based on environmental factors. In open-end systems, waste is converted back to materials and objects through recycling; hence, a linear economy is transformed into a circular economy. Environmental factors support an argument for the sustainable implementation of a circular economy. As humans are producing and using more and more matter and energy for the economy, the environment and recycling become more and more important factors affecting public health. The aim of this study is to present the economic factors of the sustainable development of a circular economy, based on the findings of the economic literature in the field. Starting with the Mankiw–Romer–Weil model of economic growth based on resource productivity, environmental employment, recycling rate and environmental innovation, three statistical hypotheses were validated through a panel data model with the use of the statistical software EViews 9. An econometric analysis was performed for 27 European Union countries between 2007 and 2016. The results highlight that the extended Mankiw–Romer–Weil model is determined by resource productivity, environmental employment, recycling rate and environmental innovation. Investing in recycling infrastructure and innovative resources is essential for the econometric model presented in our analysis, which is in line with the aims of environmental protection and sustainable economic growth.
Highlights
The limited amount of resources is a concern for economists as well as for governments, who are faced with finding the best solution to respond to the challenges of increasingly growing consumerist economies and climate change
As a circular economy is mainly based on research and innovation, we used two indicators in this field, namely innovation with environmental benefit and the number of employees in environmental protection activities. These indicators have been used to assess the impact on some standard macroeconomic variables associated with sustainable development, such as the real Gross Domestic Product (GDP) growth rate. Starting with these empirical results, we focused our analysis on the research question: “What are the factors that positively impact the European Union (EU)’s economic growth and to what extent does a circular economy affect this growth indicator?” To answer this question, we estimated which of the following four independent variables, that is, resource productivity, labour force employed in the production of goods and services for environmental protection, recycling rate and percentage of undertakings that have introduced innovations for environmental benefit on the market, has a significant impact on the dependent variable
Shortcomings are noted in relation to the labour employment and the resource productivity employed in the environmental protection area
Summary
The limited amount of resources is a concern for economists as well as for governments, who are faced with finding the best solution to respond to the challenges of increasingly growing consumerist economies and climate change. A circular economy, based on recycling, reconditioning and reusing processes, has the potential to increase sustainable economic growth, contribute to job creation for the economy and eventually drive entrepreneurs to invest in supporting programs [1,2]. The economic literature of the past two decades abounds with economic and econometric studies quantifying the impact of waste and environment management programs on economic development of countries, with respect to a general equilibrium model. It should be mentioned that the two continents of Asia and Africa rank last in terms of their waste reuse rate, while North America and Europe are the top-ranking continents and include the most highly industrialized countries
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