Evaluating the Transition of the European Union Member States towards a Circular Economy

Abstract

This paper presents the assessment of the European Union member states in terms of the circular economy (CE) targets, using a combination of the Data Envelopment Analysis (DEA) method and factor analysis. This approach fills in the existing knowledge gap by providing an innovative methodology of an objectivised comparative evaluation of the degree of implementation of the CE principles by the EU countries. Assessing countries’ performance in achieving the goals of the circular economy is a challenge due to the lack of a generally accepted methodology, the multitude of indicators, and the insufficient data. Countries may be compared in a narrow way, according to single indicators, but a more holistic synthetic assessment of countries is also needed to determine their position against each other. In such cases, DEA may be successfully used. The study resulted in the identification of two clusters of countries with similar profiles of relative efficiency in the CE goals’ implementation. It was concluded that the position of a particular country in achieving the CE aims was strongly correlated its GDP per capita. Moreover, factor analysis showed that many CE indicators are strongly correlated with each other and may be aggregated into five meta-indicators (factors): Recycling rate of general waste, Waste production, Jobs and investments, Recycling rate of special waste, and Circular material use rate. In addition to simple rankings and indication of benchmarks, the article offers a novel concept of technology competitors which was used to group units competing for positions in the ranking.