Abstract
In the past decade, the circular economy has gained attention as a mechanism of transition toward a regenerative, low carbon, and resource-efficient society. As the history of previous radical transformations shows, successful transition toward the circular economy cannot take place without understanding the institutional features of industrial transformations. This article highlights the significance of institutions by placing the circular economy model in the context of the natural resource–based sector and discusses the importance of institutions in regional path development. The article identifies three institutional determinants of both endogenous and directed transformation toward the circular economy model in the regional context: (i) proximity of physical flows and assets, (ii) maturation and diversity of market networks, and (iii) inherent values and patterns of cooperation. This article offers a starting point for future studies of circular economy transitions and the role of institutions as enabling, as well as at times obstructing transition environments.
Highlights
The urgency of addressing the climate change crisis and rapid environmental degradation is putting transformative pressures on all industries, regions, and nations.The Journal of Environment & Development 30(2)There is a consensus that the current production and consumption patterns of society need to be radically transformed in order to be compatible with a carbon- and resourceconstrained future
We focus on natural resource–rich regions in old industrialized nations, where economic activities are mostly dominated by the natural resource–based industries (NRBIs)
The main objective of this article was to discuss the significance of institutions in the creation of new development pathways in regional industrial development in the context of the circular economy debate
Summary
The urgency of addressing the climate change crisis and rapid environmental degradation is putting transformative pressures on all industries, regions, and nations.The Journal of Environment & Development 30(2)There is a consensus that the current production and consumption patterns of society need to be radically transformed in order to be compatible with a carbon- and resourceconstrained future. The circular economy (CE) model has recently surfaced in the discussions on the societal and industrial sustainable transformation agenda as a promising strategy for sustainable development (Schroeder et al, 2019). The CE model aims to create and sustain “a carbon-neutral, resource-efficient, and competitive economy” The CE model prioritizes resource and energy efficiency delivered by radical and incremental innovations with solutions that primarily aim to minimize wastage while maximizing profits. The key to this is local regenerative systems aimed at decoupling economic activity from virgin resource consumption. The success of the CE model largely depends on the relational dynamics that underlie industrial, regional, and national development. Along with the lack of knowledge of institutional determinants as both enabling and hindering factors of regional transformation, the CE in the context of, for example, natural resource–based regions remains understudied
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