Driving the transition to a circular economy: evidence from the European Union

Abstract

The circular economy has gotten increasingly popular as strategy to balance economic prosperity and environmental sustainability. Using data covering the years from 2011 to 2017 of the 28 EU countries at that time we present a methodology to measure circularity levels at the country level, unveiling two main circularity dimensions, environmental degradation and resource efficiency. These dimensions were used as dependent variables for two dynamic panel models. Our study shows that innovation and investment are both relevant to reduce environmental degradation and that the latter is also significant in promoting resource efficiency. Additionally, our study suggests that circularity levels have an inter-annual dependence, thus the level of a given time period depends on that of the previous period.