THE IMPACT OF ECONOMIC GROWTH ON CIRCULAR ECONOMY PRINCIPLES: EVIDENCE ON ASEAN COUNTRIES

This study investigates the impact of economic growth on circular economy (CE) principles in ASEAN countries from 2000 to 2019, using panel data analysis. While many ASEAN nations pursue CE to address sustainability, limited empirical work exists on how macroeconomic indicators influence this transition. This study specifically examines the role of gross domestic product (GDP), foreign direct investment (FDI), labour force participation (LF), and greenhouse gas emissions (GHG) on CE, proxied by renewable energy usage. Panel ordinary least squares (POLS) and panel autoregressive distributed lag (ARDL) models are applied to evaluate short- and long-run effects. Findings reveal that GDP positively influences CE adoption, whereas FDI, LF, and GHG emissions negatively affect it. The study acknowledges limitations due to annual data frequency and the exclusion of key variables such as government policy, technological innovation, and public awareness, which may introduce omitted variable bias. The assumption of ASEAN as a homogeneous panel is also recognised as a simplification given the region's economic diversity. Despite these limitations, the results offer useful insights for policymakers seeking to align economic growth with sustainable development through CE. Future research should adopt more granular data and expand the variable scope to strengthen understanding of CE dynamics in ASEAN.