The Role of Circular Economy in Driving Economic Growth: Evidence from EU Countries

The transition to a circular economy has become an important topic in thinking about the sustainable future of humanity. An important and often disputed point in the academic debate on this topic is the relationship between the need to achieve constant economic growth on the one hand and the preservation and protection of the environment on the other. This paper contributes to that debate by assessing the causality of the circular and economic performances of selected countries. The analysis is based on panel data from the EU Monitoring Framework database and World Bank DataBank covering 27 European Union (EU) countries during the period 2000 to 2021. The goal is to examine the impact of circular economy indicators on gross domestic product (GDP) per capita in the EU. The research is conducted through descriptive statistics and correlation and regression analysis. The obtained results indicate a strong positive correlation between circular economy indicators and GDP per capita. Also, results revealed a positive and statistically significant impact of Resource Productivity (RP), Generation of municipal waste per capita (MWpc), and Recycling rate of municipal waste (RRMW) on economic growth (GDPpc). The conclusions can be useful to EU policymakers in formulating a strategy for improving the performance of the circular economy, but also for harmonizing that improvement with the economic performance of the member states. This particularly refers to taking measures to improve resource productivity and encouraging both producers and consumers to increase waste recycling capacity, as significant factors of economic growth.