The Ukrainian Economy Transformation into the Circular Based on Fuzzy-Logic Cluster Analysis

Abstract

In the era of limited resources and progressive environmental degradation, the circular economy is a practical application of sustainable development. It is an alternative, but also competitive way to achieve economic growth in accordance with the principles of sustainable development. This issue was considered in this paper in the context of the Ukrainian economy. The Ukrainian economy’s transformation into a circular one needs to find ways to choose practical tools for such a transition, considering the destructive impact of economic activities on the environment, population, and economy. The goal was to develop a method of choosing tools for the circular transformations of economic activities for each cluster and to reduce man-made damage to the environment. Cluster analysis, fuzzy C-means method, and grouping of economic activities were used. Two analyzed sectors turned out to be the most interesting: mining and quarrying, and electricity, gas, steam, and air conditioning supply, which were finally assigned to the cluster with a high level of destructive impact, defined as ‘environmentally unfriendly’. The proposed method allows the choice of circular transformation tools for economic activities depending on the destructive impact of these economic activities within each cluster.