The Political and Socio‐Economic Foundations of the Circular Economy: Can Association and Organization Rights Be a Catalyst?

ABSTRACT Is the circular economy merely a technical issue independent of political factors? This study moves beyond the technical dimensions of circularity to explore its political determinants. While a limited number of studies have examined institutional quality indicators, a significant gap remains in the political and institutional dimensions of the circular economy. This study is the first to investigate the impact of association and organization rights (AOR) on circular economy development. Covering 30 European countries from June 2000 to 2022, the analysis examines whether AOR facilitates the transition to a circular economy. Additionally, the study accounts for key socio‐economic factors, including income level, inequality, population density and trade openness. The findings indicate that AOR positively influences the circular economy transition. Moreover, income level, population density and trade openness exhibit positive effects, whereas inequality has a negative impact. Robustness checks using an alternative AOR measure confirm these results. The findings highlight the importance of political freedoms in fostering circularity and suggest that enhancing AOR could create a win–win opportunity for achieving sustainability goals, particularly in Europe and globally.