Assessment of the Circular Economy’s Impact in the EU Economic Growth

Abstract

Starting from the significant differences between the European Union's member states regarding framing and implementing the sustainable development strategies and the transition from linear economy towards circular economy (European Commission, 2017a), the article analyses the impact that circular economy indicators, such as the recycling rate of municipal waste, packaging waste and bio-waste, the expenditure on research and development to find solutions to extend the life cycle of materials and reusing waste, as well as the environmental taxes have on the resource productivity and real economic growth. Using these correlations, we consider that the transition from the linear economic model to the circular economic model has positive effects, as proven by this study. The proposed model uses data for the 28 member states of the European Union, in the 2005-2016 time frame. The novelty of this study lies in using a data panel model for estimating the impact that the measures associated with the circular economy have on the resource productivity and economic growth. The obtained results show that the resource productivity improves by 0.01307 considering one percent increase in the recycling rate of the municipal waste, by 0.159988 if the research and innovation as percentage in the GDP increases by one percent and by 0.068711 when the number of patents in the EU (as for 1 million inhabitants) increases by one unit. All these values stress out the positive effects the circular economy model may have on the society's sustainable development.

The Management of Municipal Waste through Circular Economy in the Context of Smart Cities Development

“…As highlighted by some authors, under the auspices of circular economy it is possible to obtain and keep economic growth, based on using fewer resources, improving the production technologies, using recycled raw materials and using renewable energy [20], [23]. The study of Vută et al [24] shows the existence of a direct connection between the measures adopted to increase the productivity of resources, associated to circular economy and the increase the GDP. The authors consider also that in order to obtain a sustainable economic growth we have to focus on the recycling of waste, which lead also to a decrease in the costs of production.…”

Plastic waste as a challenge for sustainable development and circularity in the European Union

“…Countries implement their circular strategies not only for environmental but also for economic reasons. The transition entails new investment which remains an important factor in the face of declining growth rates and will contribute to cost reduction (Ellen MacArthur Foundation et al, 2015;Vuta et al, 2018). Finland, Italy and the Netherlands have integrative roadmaps in order to achieve a full CE model before a certain year; Germany's Closed Substance Cycle and Waste Management Act promotes multi-use, low-waste, long-life and repair-friendly products; Sweden, Portugal (and also Germany) aim their programs at a specific industry -green and bioeconomic sectors, while Spain, Slovakia, France, Belgium and Romania integrate CE aspects to their national strategies through waste management which is considered as an essential part of CE.…”

Circular Economy and Innovation: A Systematic Literature Review

“…With CE, the aim is to extend the end of the product's useful life so that a company's waste or outputs become inputs for other production cycles through the processes shown in Figure 2. This process leads to the reduction of waste and the conservation of most of the value of products, raw materials, or resources within the production circuit for a longer period of time (Vuta et al, 2018), which in turn represents a new source of income. Reconceptualising waste as a resource means adopting new innovative strategies for existing supply chains (Perey et al, 2018).…”

“…The Ellen MacArthur Foundation, a charitable association whose objective is to promote the transition to CE (Volker et al, 2020), establishes five business models that characterise companies in this economy and require innovation for their implementation: circular suppliers, resource recovery, product life extension, shared platforms, and products as services (Zucchella & Previtali, 2019). The transition from a linear economy to a CE is envisaged by the European Commission (Vuta et al, 2018) through various communications, documents, policies, and directives, such as the Paris Agreement and the Agenda 2030 (Volker et al, 2020).…”