The determinants for a circular economy in Europe

Abstract

The circular economy contrasts with the traditional linear economy since it presents a sustainable way both to produce goods and services and to contribute to the development of economies. This paper aims to contribute to a better knowledge of the efficiency of resources productivity, a common indicator to compare how circular economies are, through the estimation of the main determinants for the circular economy in Europe. A systematic analysis and comparison of the performance of all the European Union countries was performed to get further insight into their root causes and to help designing future policies towards a more circular European Union economy. With this purpose, a set of determinant factors for a circular economy in Europe were analysed, under the period between 2000 and 2016. A cluster analysis was applied and complemented with three econometric estimation methods: panel unit root tests, panel cointegration tests and vector autoregression model. The main findings allowed to cluster European countries into three different groups according to the growth rate of their resources productivity and to explain them according to the selected exploratory factors. Special efforts were made to explain the highest productivity growth group, as a way to find relevant drivers towards sustainable productivity growths.

Keywords: Circular economy; Cluster analysis; Europe; Panel data; Resources productivity; Sustainable growth.