ASSESSMENT OF THE IMPACT OF CIRCULAR ECONOMY COMPETITIVENESS AND INNOVATION ON EUROPEAN ECONOMIC GROWTH

Andrija Popović; Maja Ivanović-Djukić; Ana Milijić

doi:10.5937/ejae19-39057

Andrija Popović Innovation Center, University of Nis, Serbia https://orcid.org/0000-0003-4558-8226
Maja Ivanović-Djukić Faculty of Economics, University of Nis, Serbia https://orcid.org/0000-0002-0547-7209
Ana Milijić Innovation Center, University of Nis, Serbia https://orcid.org/0000-0002-7844-5398

DOI: https://doi.org/10.5937/ejae19-39057

Keywords: Circular Economy, Competitiveness, Economic Development, Sustainable Development, Europe

Abstract

The world usage of raw materials is 70% higher than what can Earth safely renew. The Circular Economy represents a new model of economic development relying on the 7Rs (redesign, reduce, reuse, repair, renovate, recycle, and recover) to provide operational and strategic benefits on the micro, meso and macro level. This research aims to determine the impact that circular economy competitiveness and innovation have on economic growth within European countries by evaluating the impact of four independent variables selected from the European Commission Circular Economy monitoring framework on the GNI per capita. We have analysed the competitiveness through Values Added at Factor Cost (VAFC), Gross Investment in Tangible Goods (GITG) and Number of Employees (EMP) in Circular Economy, innovation through the Number of Patents in climate change mitigation technologies related to wastewater treatment or waste management (PAT), while the economic growth was estimated based on the GNI per capita annual growth rate (GNIpc). We applied correlation and regression methods to the sample of 25 European countries using the log-transformed data. The results show that the correlation between VAFC and GNIpc is moderate and significant but negative, while the correlation between GITG and EMP and GNIpc is not statistically significant.

Author Biography

Andrija Popović, Innovation Center, University of Nis, Serbia

Andrija Popovic was born May 4, 1993, in Prokuplje, Republic of Serbia. He finished his primary and secondary education in Blace. In 2012 he enrolled in the Faculty of Economics, University of Niš. During his undergraduate studies, he was awarded Toplički ustanak, the award for the best students from Opština Blace, and a Dositeja scholarship for the Republic of Serbia best students. He completed his studies in 2016with an average grade of 9.68. After their Bachelor studies, he enrolled on the Master studies program in General Economics at the Faculty of Economics in Niš. During his Master studies, the focus of the research was development economics and macroeconomics. For his academic and extracurricular efforts, he was awarded the Zoran Djindjic Scholarship and was chosen to be one of the 60 students to gain practical knowledge in a German company. He completed his internship in Bayer AG, Leverkusen, after which he returned to Serbia and completed his Master studies with an average grade of 10.00. After his Master studies, he enrolled in Doctoral studies at the Faculty of Economics in Niš. Currently, he is a student in the 3. year of doctoral studies, and since June 2019, he has been filling the position of Research Associate at the Innovation Center, University of Niš.

References

Berg, A., Antikainen, R., Hartikainen, E., Kauppi, S., Kautto, P., Lazarevic, D., … & Saikku, L. (2018). Circular economy for sustainable development. Finnish Environment Institute.

Bogoviz, A. V., & Sergi, B. S. (2018). Will the circular economy be the future of Russia's growth model?. In Exploring the future of Russia's economy and markets. Emerald Publishing Limited.

Busu, M., & Nedelcu, A. C. (2017). Sustainability and Economic Performance of the companies in the renewable energy sector in Romania. Sustainability, 10(1), 8.

Busu, M., & Trica, C. L. (2019). Sustainability of circular economy indicators and their impact on economic growth of the European Union. Sustainability, 11(19), 5481.

Chateau, J., & Mavroeidi, E. (2020). The jobs potential of a transition towards a resource efficient and circular economy (No. 167). OECD Publishing.

Chen, Z., Chen, S., Liu, C., Nguyen, L. T., & Hasan, A. (2020). The effects of circular economy on economic growth: A quasi-natural experiment in China. Journal of Cleaner Production, 271, 122558.

Circle Economy. (2022). The Circularity Gap Report 2022. Amsterdam: Circle Economy.

Cohen, P., West, S. G., & Aiken, L. S. (2014). Applied multiple regression/correlation analysis for the behavioral sciences. Psychology press.

Domenech, T., & Bahn-Walkowiak, B. (2019). Transition towards a resource efficient circular economy in Europe: policy lessons from the EU and the member states. Ecological Economics, 155, 7-19.

Ellen Mac Arthur Foundation (EMF). (2012, January) Towards the Circular Economy 1: Economic and Business Rationale for an Accelerated Transition, Cowes, Isle of Wight.

Ellen Mac Arthur Foundation (EMF). (2022). The Circular Economy in Detail. Ellen Mac Arthur Foundation. Retrieved June 8, 2022, from https://archive.ellenmacarthurfoundation.org/explore/the-circular-economy-in-detail

Ellen MacArthur Foundation (EMF). (2013) Towards the Circular Economy, vol. 1 (Isle of Wight).

Esposito, M., Tse, T., & Soufani, K. (2018). Introducing a circular economy: New thinking with new managerial and policy implications. California Management Review, 60(3), 5-19.

European Commission (EC). (2022). Circular Economy. Retrieved June 8, 2022, from https://ec.europa.eu/environment/topics/circular-economy_en

Freedman, D., Pisani, R., & Purves, R. (2007). Statistics (international student edition). Pisani, R. Purves, 4th Edn. WW Norton & amp; Company, New York.

Geissdoerfer, M., Savaget, P., Bocken, N. M., & Hultink, E. J. (2017). The Circular Economy – A new sustainability paradigm?. Journal of cleaner production, 143, 757-768.

Geng, Y., Sarkis, J., & Bleischwitz, R. (2019). How to globalize the circular economy. Nature, 565(7738), 153-155.

Ghisellini, P., Cialani, C., & Ulgiati, S. (2016). A review on circular economy: the expected transition to a balanced interplay of environmental and economic systems. Journal of Cleaner Production, 114, 11-32.

Hysa, E., Kruja, A., Rehman, N. U., & Laurenti, R. (2020). Circular economy innovation and environmental sustainability impact on economic growth: An integrated model for sustainable development. Sustainability, 12(12), 4831.

Karman, A., & Pawłowski, M. (2022). Circular economy competitiveness evaluation model based on the catastrophe progression method. Journal of Environmental Management, 303, 114223.

Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualising the circular economy: An analysis of 114 definitions. Resources, conservation and recycling, 127, 221-232.

Korhonen, J., Honkasalo, A., & Seppälä, J. (2018). Circular economy: the concept and its limitations. Ecological economics, 143, 37-46.

Lieder, M., & Rashid, A. (2016). Towards circular economy implementation: a comprehensive review in context of manufacturing industry. Journal of cleaner production, 115, 36-51.

MaCurdy, T. E., & Pencavel, J. H. (1986). Testing between Competing Models of Wage and Employment Determination in Unionized Markets. Journal of Political Economy, 94(3), S3–S39. http://www.jstor.org/stable/1837175

Marković, M., Krstić, B., & Rađenović, T. (2020). Circular economy and sustainable development. Economics of Sustainable Development, 4(1), 1-9.

Martinho, V. D., & Mourão, P. R. (2020). Circular economy and economic development in the European Union: a review and bibliometric analysis. Sustainability, 12(18), 7767.

Mathews, J. A., & Tan, H. (2016). Circular economy: lessons from China. Nature, 531(7595), 440-442.

Pearce, D. W., & Turner, R. K. (1989). Economics of Natural Resources and Environment, Hemel Hempstead.

Author 1. (2020). Implications of the Fourth Industrial Revolution on sustainable development. Economics of Sustainable Development, 4(1), 45-60.

Author 1 & Author 3. (2021). Particular Contributions of the Circular Economy to the Socio-Economic Sustainability of Serbia. RESEARCHING ECONOMIC DEVELOPMENT AND ENTREPRENEURSHIP IN TRANSITION ECONOMIES, 255.

REPSOL. (2022, May 30). What is circular economy and why is it important? REPSOL Global. Retrieved June 8, 2022, from https://www.repsol.com/en/sustainability/circular-economy/index.cshtml

Smol, M., Kulczycka, J., & Avdiushchenko, A. (2017). Circular economy indicators in relation to eco-innovation in European regions. Clean Technologies and Environmental Policy, 19(3), 669-678.

Sverko Grdic, Z., Krstinic Nizic, M., & Rudan, E. (2020). Circular economy concept in the context of economic development in EU countries. Sustainability, 12(7), 3060.

The World Bank, World Development Indicators (WB). (2022). GNI per capita growth (Annual) [Data file]. Retrieved May 30, 2022, from https://databank.worldbank.org/reports.aspx?source=2&series=NY.GNP.PCAP.KD.ZG

United Nations (UN). (2015) Transforming our world: The 2030 Agenda for Sustainable Development. Sustainable Development Knowledge Platform. Retrieved May 30, 2022, from https://sustainabledevelopment.un.org/post2015/transformingourworld

World Economic Forum (WEF), Ellen MacArthur Foundation (EMF) & McKinsey & Company. (2014, January). Towards the Circular Economy – Accelerating the Scale-Up Across Global Supply Chains. Geneva, Switzerland. World Economic Forum. Retrieved June 8, 2022, from https://www3.weforum.org/docs/WEF_ENV_TowardsCircularEconomy_Report_2014.pdf

Yuan, Z., Bi, J., & Moriguichi, Y. (2006). The circular economy: A new development strategy in China. Journal of industrial ecology, 10(1‐2), 4-8.