Transition towards circular economy in EU countries: a composite indicator and drivers of circularity

Abstract

The transition to a circular economy (CE) has become one of the main issues of sustainable development policies in many countries worldwide. The present paper offers an empirical analysis of this transition to circularity in European Union (EU) countries. It provides multidimensional indicators for CE performance and observes the interrelationship between macroeconomic indicators and the level of CE implementation. Taking data from 26 EU member states during the period 2010-2019, weighted indicators are constructed for the assessment and comparison between heterogenous countries. Subsequently, a multivariant analysis is performed to quantify the impact of different macroeconomic variables on circularity indicators, such as R+D, sectoral added value, renewable energy usage and population density. The results reveal three distinct groups: those whose indicators display a positive sign, those that show a negative sign, and those that display a changeable evolution throughout the period studied. The panel data regressions carried out to assess the determinants of circularity show the positive impact of expenditure on R+D. Also, it is worth mentioning the existing differences in the implementation status of CE among countries, contingent upon on when they joined the EU.