How circular economy adoption fosters export diversification in emerging markets

Purpose — This study examines whether the share of circular economy (CE) products in total exports is associated with export concentration in emerging market economies (EMEs). It also investigates whether this relationship varies with countries’ structural characteristics, particularly manufacturing intensity.Method — The analysis uses panel data for 14 EMEs over the 2022–2024 period. A fractional logit model estimates the relationship between CE export share and export concentration, with interaction terms included to assess whether the association varies across different levels of manufacturing intensity.Findings — The results show that higher CE export shares are associated with lower export concentration, suggesting that CE-related exports may contribute to greater export diversification. However, this association is not uniform across countries. It is stronger in less industrialized economies and weaker in more manufacturing-intensive economies where export structures are already more specialized. The findings therefore indicate diminishing diversification gains as CE intensity rises. Because internationally comparable CE trade data are only available from 2022 onward, the results should be interpreted as short-run associations rather than long-run causal effects.Implication — The study suggests that CE-related exports may represent a relevant diversification channel for EMEs, especially in earlier stages of industrial development.Originality — It provides one of the cross-country empirical assessments linking CE export activity to export concentration using newly available CE trade data.