Sustainability of Circular Economy Indicators and Their Impact on Economic Growth of the European Union

Abstract

In this paper, we develop a methodology for studying the sustainability of the circular economy model, based on environmental indicators, and its impact on European Union (EU) economic growth. In open-end systems, waste is converted back to materials and objects through recycling; hence, a linear economy is transformed into a circular economy (CE). Environmental factors support the argument for the sustainable implementation of a circular economy. The main objective of this paper is to analyze the sustainability of the CE indicators and to elaborate a multilinear regression model with panel data for determining the dependency of the main CE factors on EU economic growth. Starting with the model of economic growth based on circular material use rate, recycling rate of municipal waste (RRMW), trade in recycling materials, labor productivity, environmental taxes, and resource productivity as independent variables, six statistical hypotheses were validated through a multiple regression model with the use of the statistical software EViews 11. The research study was conducted for 27 EU countries, and the data was collected from the European Union Statistical Office (EUROSTAT), during the time frame 2010 to 2017. Based on econometric modeling, the paper highlights that circular economy generates sustainable economic growth across the EU.