Circular business activities and economic performance optimization in EU countries: towards consumption footprint management

Adewumi, Olugbenga Michael; Echebi i, Chukwuemeka; Alola, And ew Adewale
A icle
Ci cula business ac i i ies and economic pe o mance
op imiza ion in EU coun ies: owa ds consump ion
oo p in managemen
Cogen Economics & Finance
P o ided in Coope a ion wi h:
Taylo & F ancis G oup
Sugges ed Ci a ion: Adewumi, Olugbenga Michael; Echebi i, Chukwuemeka; Alola, And ew Adewale
(2024) : Ci cula business ac i i ies and economic pe o mance op imiza ion in EU coun ies:
owa ds consump ion oo p in managemen , Cogen Economics & Finance, ISSN 2332-2039, Taylo
& F ancis, Abingdon, Vol. 12, Iss. 1, pp. 1-19,
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Ci cula business ac i i ies and economic
pe o mance op imiza ion in EU coun ies:
owa ds consump ion oo p in managemen
Olugbenga Michael Adewumi, Chukwuemeka Echebi i & And ew Adewale
Alola
To ci e his a icle: Olugbenga Michael Adewumi, Chukwuemeka Echebi i & And ew Adewale
Alola (2024) Ci cula business ac i i ies and economic pe o mance op imiza ion in EU
coun ies: owa ds consump ion oo p in managemen , Cogen Economics & Finance, 12:1,
2394491, DOI: 10.1080/23322039.2024.2394491
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ENVIRONMENTAL ECONOMICS & SUSTAINABILITY | RESEARCH ARTICLE
Ci cula business ac i i ies and economic pe o mance op imiza ion in
EU coun ies: owa ds consump ion oo p in managemen
Olugbenga Michael Adewumi , Chukwuemeka Echebi i and And ew Adewale Alola
Inland No way Uni e si y o Applied Sciences, Lillehamme , No way
ABSTRACT
As ci cula business ac i i y is a pi o al componen o he Eu opean G een Deal, his
s udy examines i s impac on economic p ospe i y by examining how he model in lu-
ences income le els. The in es iga ion spans a panel o 27 Eu opean Union (EU) mem-
be coun ies om 2014 o 2023, ac o ing in he income e ec o consump ion
oo p in and public us in go e ning ins i u ions. Based on he sys em Gene alized
Me hod o Momen s (GMM) es ima o s o he dynamic panel model, he esul s e eal
ha ci cula business ac i i ies enhance economic well-being. Howe e , he in e ac ion
e ec o consump ion oo p in limi s he ull po en ial o his enhancing e ec .
Mo eo e , as public con idence in go e nmen ins i u ions imp o es, so does eco-
nomic well-being. This pe spec i e unde sco es he pi o al ole o us in bols e ing
he economic bene i s o ci cula business ac i i ies, leading o mo e obus socie al
condi ions. O e all, he s udy sugges s ha while ci cula business ac i i ies can
imp o e economic well-being, e icien managemen o he consump ion oo p in is
c ucial o op imiza ion. I s policy implica ion emphasizes balancing economic aspec s
wi h social, ins i u ional, and en i onmen al elemen s o enhance indi idual well-
being. Thus, he indings con ibu e o he li e a u e and p o ide aluable policy
insigh s in o ci cula economy models, opening up a enues o u u e conside a ion.
IMPACT STATEMENT
This s udy highligh s he signi ican ole o ci cula business ac i i ies in enhancing eco-
nomic p ospe i y wi hin he amewo k o he Eu opean G een Deal. By analyzing da a
om 27 EU membe coun ies be ween 2014 and 2023, he esea ch demons a es ha
while ci cula business p ac ices posi i ely impac economic well-being, hei ull po en-
ial is cons ained by he in e ac ion e ec o consump ion oo p in . Addi ionally, i
inds ha inc eased public us in go e nmen ins i u ions u he ampli ies he eco-
nomic bene i s o ci cula ac i i ies. The s udy unde sco es he impo ance o managing
consump ion oo p in s and os e ing ins i u ional us o op imize ci cula economy
models’economic and socie al ad an ages. These insigh s o e aluable policy implica-
ions, emphasizing he need o in eg a e a ious ac o s o imp o e o e all well-being.
ARTICLE HISTORY
Recei ed 27 May 2024
Re ised 31 July 2024
Accep ed 14 Augus 2024
KEYWORDS
Ci cula economy; economic
well-being op imiza ion;
public con idence;
consump ion oo p in ; EU
SUBJECTS
En i onmen & Economics;
S a is ics o Business,
Finance & Economics;
Labou Economics;
De elopmen Economics
1. In oduc ion
The Eu opean Union’s (EU’s) in oduc ion o en i onmen al p o ec ion is one o he o emos p inciples,
and his idea has been me ged in o i s policies o achie ing en i onmen al sus ainabili y. One o he
d i e s o his shi is he ealiza ion ha he consump ion pa e ns o goods and se ices nega i ely
in luence he global en i onmen (Eu opean Commission, 2020). An a emp , among o he s, o achie e
he EU’s en i onmen al objec i es and a ge s is o mi iga e he ad e se en i onmen al impac s o
goods and se ices ela i e o consump ion oo p in (Sany
e-Mengual & Sala, 2023). In his ega d, he
EU has launched he Eu opean G een Deal (EGD), a s a egic ini ia i e o ans o m Eu ope in o he i s
CONTACT Olugbenga Michael Adewumi olugbenga.ad[email p o ec ed] Inland No way Uni e si y o Applied Sciences, Lillehamme , No way
This a icle was o iginally published wi h e o s, which ha e now been co ec ed in he online e sion. Please see Co ec ion (h p://dx.doi.
o g/10.1080/23322039.2024.2398308)
Supplemen al da a o his a icle can be accessed online a h ps://doi.o g/10.1080/23322039.2024.2394491.
ß2024 Inland No way Uni e si y o Applied Sciences. Published by In o ma UK Limi ed, ading as Taylo & F ancis G oup
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons A ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. The e ms on which his a icle has been
published allow he pos ing o he Accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
COGENT ECONOMICS & FINANCE
2024, VOL. 12, NO. 1, 2394491
h ps://doi.o g/10.1080/23322039.2024.2394491
clima e-neu al con inen . The EGD se s ambi ious a ge s o ackle clima e change, en i onmen al
deg ada ion, and esou ce e iciency, all while ensu ing economic compe i i eness. This ini ia i e is in
line wi h he u gen need o add ess en i onmen al c ises (IPCC, 2023) o igge a shi owa ds sus ain-
able economic pa adigms. In o de o ealize his, esou ce e iciency mus be enhanced, and economic
g ow h and socie al well-being mus be decoupled om en i onmen al impac s (Eu opean Commission,
2011; Sala e al., 2014). In his connec ion, he Ci cula Economy (CE) model has been widely discussed
and conside ed a po en ial solu ion (Eu opean Commission, 2020; Hopkinson e al., 2020).
The CE is a egene a i e sys em ha aims o elimina e was e and es o e na u e. I ope a es based on
h ee design p inciples: he e adica ion o was e and pollu ion, he ci cula ion o p oduc s and ma e ials
a hei maximum u ili y, and he ein o cemen o na u al sys ems (Ellen MacA hu Founda ion, 2020).
The e olu ion o his concep has been signi ican ly in luenced by he escala ing conce ns abou en i -
onmen al deg ada ion, esou ce sca ci y, and clima e change (S ahel, 2016). Speci ically, he CE s ongly
emphasizes esou ce egene a ion, was e educ ion, and p omo ing sus ainable consump ion and p o-
duc ion pa e ns, e olu ionizing adi ional linea economic p ocesses (Ellen MacA hu Founda ion,
2013,2020). By op imizing esou ce use and minimizing was e, nume ous au ho s ha e demons a ed
ha ci cula business p ac ices can s imula e economic g ow h while add essing en i onmen al chal-
lenges (Donaghy, 2022; Ellen MacA hu Founda ion, 2020; Ki chhe e al., 2017a; Winans e al., 2017).
Howe e , he CE o ci cula business ac i i ies, as p e e ed in he cu en s udy, ace he en i onmen al
epe cussions o an a e age EU ci izen’s consump ion habi s (consump ion oo p in ), which exceed he
sus ainable limi s o human exis ence in se e al impac a eas (Sany
e-Mengual & Sala, 2023).
The concep o he consump ion oo p in , a comp ehensi e amewo k o 16 indica o s oo ed in Li e
Cycle Assessmen (LCA), was de eloped o quan i y he en i onmen al impac s associa ed wi h he con-
sump ion habi s o an a e age EU ci izen. The en i onmen al impac s include hose occu ing wi hin he
EU e i o y and hose embedded in he impo and expo ac i i ies (Sany
e-Mengual & Sala, 2023,p.
13). This amewo k encompasses i e key a eas: ood, mobili y, housing, household goods, and applian-
ces (Sala & Sany
e Mengual, 2022). Daily ac i i ies such as ea ing and d i ing con ibu e signi ican ly o
he EU consump ion oo p in . In his con ex , ood consump ion is he mos impac ul, accoun ing o
an 18% inc ease in he consump ion oo p in . Findings sugges ha his inc ease is p ima ily d i en by
he en i onmen al oll o ag icul u al p oduc ion (Sany
e-Mengual & Sala, 2023, p. 20). P obing deepe
in o he impac o ood consump ion, i becomes e iden ha he ise in mea and dai y in ake plays a
signi ican ole. Acco dingly, he e has been a ma ked inc ease in he consump ion o ce ain oods like
cheese, quinoa, o u, and a ocados, e lec ing shi s in die a y p e e ences. Con e sely, chickpeas, una,
and oli e oil consump ion has signi ican ly declined (Sany
e-Mengual & Sala, 2023, p. 31).
The inc easing consump ion oo p in indica es inc eased municipal solid was e (MSW) gene a ion,
causing signi ican en i onmen al conce n. Consequen ly, e ec i ely managing his escala ing olume o
was e p esen s a subs an ial challenge. In pe spec i e, he global gene a ion o MSW was 2.01 10
9
ons in 2016 and is p ojec ed o escala e o 3.40 10
9
ons by 2050 (Kaza e al., 2018). Despi e hese ig-
u es, he e a e conce ns ha he in as uc u e o managing his MSW wi hin he CE amewo k is insu -
icien , leading o en i onmen al issues such as pollu ion and heal h isks. Fo ins ance, he Uni ed
Kingdom aces a sho age o CE in as uc u e, which is necessa y o educing esou ce use and enhanc-
ing ecycling (Peake & B andmay , 2019). While a signi ican po ion o he MSW in he EU is ei he
ecycled o eco e ed, he achie emen o ecycling and eco e y a ge s a ies (EU a e age ¼47%).
F om his con ex , a subs an ial amoun o was e (>80%), which could po en ially gene a e economic
bene i s, is s ill being disposed o in land ills in some EU coun ies (Eu os a , 2019). This si ua ion calls
o imp o ed was e managemen s a egies and policies o ensu e en i onmen al sus ainabili y and pub-
lic heal h. I also unde sco es he impo ance o p omo ing was e educ ion p ac ices and enhancing
ecycling and eco e y e o s. Thus, add essing his issue is c ucial in pu suing a mo e sus ainable and
was e- ee socie y. In his ega d, Ma ino and Pa iso (2020) highligh ha addi ional e o s a e needed
wi hin he EU membe s a es o su moun he challenges associa ed wi h he ansi ion o he CE. This
easoning aligns wi h o he s udies showing ha e ec i e CE adop ion can p oduce sus ainable en i on-
men al pe o mance (Dey e al., 2022; Fan e al., 2021; Mawu o e al., 2023) and economic gains (Sany
e-
Mengual & Sala, 2023).
2 O. M. ADEWUMI ET AL.
Howe e , p e ious esea ch indica es ha while CE has economic signi icance (Donaghy, 2022; Ellen
MacA hu Founda ion, 2020; Ki chhe e al., 2017a; Sany
e-Mengual & Sala, 2023), i s alue addi ion is
limi ed by he consump ion oo p in (Camacho-O e o e al., 2018; Ki chhe e al., 2017b). The e o e, a
desi able end ega ding op imali y is o sepa a e he en i onmen al impac s o consump ion oo p in
om he co esponding economic ou pu (Sany
e-Mengual e al., 2019). This iew sugges s a mo e
owa ds mo e esponsible consump ion pa e ns ha can mi iga e he e ec s o inc easing consump ion
oo p in . In o he wo ds, i unde sco es he need o bols e obus ci cula business ac i i ies by imple-
men ing policies and p og ams encou aging mo e ci izen pa icipa ion wi hin EU coun ies. The a ionale
is ha imp o ed CE p ac ices can yield subs an ial global, na ional, and household economic bene i s
(Fe ei a G ego io e al., 2018; Lyeono e al., 2019). Along hese lines, he cu en s udy aims o in es i-
ga e how he economic impac o ci cula business ac i i ies op imizes, educing he en i onmen al
impac o he escala ing consump ion oo p in ac oss EU coun ies. The a ionale o his di ec ion
hinges on nume ous g ounds, each con ibu ing o a comp ehensi e unde s anding o CE and i s impli-
ca ions. Fi s ly, he en i onmen al impac o he EU’s pe capi a consump ion oo p in is exceeding
plane a y bounda ies. This upwa d end sugges s obs acles o diminishing he EU’s consump ion oo -
p in in he o hcoming yea s (Eu opean En i onmen al Agency, 2024). Thus, his ala ming end neces-
si a es a ho ough unde s anding o managing and mode a ing he en i onmen al impac o he EU’s
consump ion oo p in . Secondly, while he speci ic ways in which he consump ion oo p in hinde s
he CE a e no ully unde s ood (Geissdoe e e al., 2017), he e is a sca ci y o s udies demons a ing
op imal models o assessing he in luence o he CE on economic ou comes. Hence, we aim o ill a
gap by empi ically examining he impac o ci cula business ac i i ies on economic well-being o un eil
a di ec ion owa d op imiza ion.
In o de o accomplish ou objec i e, h ee esea ch ques ions a e a icula ed. Fi s , is he economic
pe o mance o ci cula business ac i i ies op imal in he EU coun ies? Second, i no , how does he eco-
nomic pe o mance o ci cula business ac i i ies op imize ac oss he EU? Thi d, wha measu es should
he EU coun ies ake o imp o e ci cula business pa icipa ion? To answe hese ques ions, we in es i-
ga ed a panel o 27 EU membe coun ies be ween 2014 and 2023 based on Eu os a and Wo ld Bank
da abases. Then, we u ilize he Gene alized Me hod o Momen s (GMM) sys em es ima o s o linea
dynamic panel da a models o acili a e he empi ical analysis. The idea is o gain insigh s in o he ime-
bound e ec s o ci cula business ac i i ies on economic well-being, explo ing he pa e n o EU ci izens’
pa icipa ion o po en ial op imal ou comes. Along his line, we include he e ec o public con idence
in go e nmen ins i u ions on economic well-being in he s udy. This aspec enables an unde s anding
o why ci izens’pa icipa ion in ci cula business ac i i ies may imp o e o dec ease ac oss he EU coun-
ies. Following his pa h, he indings e eal a complex ela ionship be ween ci cula business ac i i ies
and economic well-being. While ci cula business ac i i ies can imp o e income le els, he e a e po en-
ial downsides. F om a policy pe spec i e, we add ess hese d awbacks by unde sco ing he impo ance
o managing he consump ion oo p in o CE model imp o emen . Essen ially, he s udy o e s aluable
insigh s ha can assis policymake s in op imizing he economic bene i o ci cula business ac i i ies,
leading o imp o ed en i onmen al condi ions and economic well-being in EU coun ies.
Nex , he pape p og esses in o Sec ion 2 wi h he li e a u e e iew and p esen s he esea ch
me hod in Sec ion 3.Sec ion 4 un eils he esul s, ollowed by a discussion in Sec ion 5. Then, i w aps
up wi h he conclusion in Sec ion 6.
2. Li e a u e e iew
2.1. Economic pe o mance
In adi ional economic heo y, e alua ing a coun y’s economic pe o mance is pi o al in in o ming deci-
sion-making p ocesses ac oss a ious con ex s, om shaping go e nmen al policies o o mula ing indi-
idual in es men s a egies. I s ands as a basis o d i ing economic ajec o ies and nu u ing
sus ainable p og ess. While GDP pe capi a equen ly se es as a benchma k in such assessmen s,
c i icisms ha e a isen ega ding i s limi a ions as a singula indica o . Schola s such as D
ede
cek and
Dudzich (2022) ha e highligh ed conce ns abou he exclusion o ac o s like income inequali y and
COGENT ECONOMICS & FINANCE 3

economic eedom, which may dis o he accu acy o GDP pe capi a as a comp ehensi e me ic.
Ne e heless, p oponen s, including B ock and Ra hbu n (2009), B own (2023), and B igh Hope
In e na ional (2023), con end ha GDP pe capi a e ains e iciency, pa icula ly in compa a i e analyses
ac oss na ions wi h as ly dispa a e popula ion sizes. They a gue ha his measu e o e s a mo e equi -
able basis o e alua ing economic pe o mance, accommoda ing he nuances inhe en in c oss-coun y
compa isons.
2.2. O e iew o economic pe o mance in he EU con ex
As o 2024, he EU has a GDP es ima ed o be wo h $19.35 illion (nominal) o $26.64 illion in pu -
chasing powe pa i y (PPP), hus accoun ing o one-six h o he global economy. In nominal e ms, i is
he second bigges economy in he wo ld, jus behind he Uni ed S a es o Ame ica (USA), and he hi d
la ges in e ms o PPP, wi h China and he US in on . Ge many, F ance, and I aly a e he bloc’s h ee
la ges economies in e ms o na ional GDP. The GDP pe capi a exp essed in PPP was abou $56,970 in
2023, bu he e we e ema kable di e ences be ween membe s a es ha lay well abo e and hose ha
blew he a e age. Figu e 1, as indica ed below, shows he GDP pe capi a index o EU membe s a es
in 2023. The Figu e indica es ha Luxembou g has he highes GDP le el o 140% abo e he EU a e -
age, while Bulga ia eco ded he lowes GDP pe capi a, 36% below he EU a e age (Eu os a , 2024).
2.3. Ci cula economy
The ci cula economy has gained signi ican a en ion due o ecen global impe a i es o adop mo e
sus ainable p ac ices o minimize was e, mi iga e he apid deple ion o ini e esou ces, and cu b emis-
sions. This a en ion comes om academics, policymake s, and p ac i ione s ac oss all le els, including
p i a e, public, and e en olun a y o ganiza ions (Eu opean Pa liamen , 2023; Geissdoe e e al., 2020;
Kanda e al., 2021; U bina i e al., 2017). Fo example, B ydges (2021) in es iga ed he s a egies o a
mo e ci cula ashion indus y in Sweden. Geissdoe e e al. (2022) compa ed he d i e s and ba ie s
and iden i ied 25 obs acles and 10 d i e s. The b oad ocus anges om sus ainable consump ion and
p oduc ion o indus ial ecology, om s a ups o small and medium en e p ises (eg Ki chhe e al.,
2023; Mahe e al., 2023; Van Ops al & Bo ms, 2023). This di e si y o in e es is also e lec ed in how CE
is concep ualized. A he Eu opean Union le el, he Eu opean Pa liamen de ines he CE as ‘a model o
p oduc ion and consump ion ha in ol es sha ing, leasing, eusing, epai ing, e u bishing, and ecycling
exis ing ma e ials and p oduc s as long as possible’(Eu opean Pa liamen , 2023, p.115). In a nu shell, i
is an economic business model ha en ails a combina ion o measu es and app oaches o minimize
was e h ough he u iliza ion o he leas amoun o esou ces bu a he same ime maximizing alue
Figu e 1. Index o GDP pe capi a, 2023 (in pu chasing powe s anda ds) - adop ed om Eu os a (2024).
4 O. M. ADEWUMI ET AL.
ex ac ion in he p ocess, hus elonga ing a p oduc ’s end-o -li e and ul ima ely mo ing away om he
linea socio-economic Model (Geissdoe e e al., 2020; Tu a e al., 2019). The linea model has pushed
excessi e ma e ial consump ion due o he use-and-dispose cul u e, a p ocess o en concep ualized as
‘ ake, make, and was e’(Eu opean Pa liamen , 2023).
In con as , CE models lean owa d a mo e es o a i e and egene a i e sys em (B ydges, 2021).
Typically, his includes bu is no limi ed o eusing, sha ing, leasing, ecycling, and eco e ing ma e ials
o p oduc ion, edis ibu ion, and consump ion (Hen y e al., 2020; U bina i e al., 2017). This ansi ion
o ci cula business models, exempli ied in he CE model in Figu e 2, could be achie ed in se e al ways
bu mainly h ough one o a combina ion o h ee s a egies: e aining p oduc owne ship, p oduc li e
ex ension, and design o ecycling. In his con ex , o ganiza ions mus cha a pa h ha aligns wi h hei
capabili ies and esou ces (Dumas & Van Wassenho e, 2021). The CE has su aced as a undamen al
elemen o he EU policy, pa icula ly wi h he Eu opean Commission’s endo semen o a ci cula econ-
omy ac ion plan in Ma ch 2020, e e ed o as he Eu opean G een Deal. This plan aimed o use egula-
o y and non- egula o y measu es o achie e he bloc’s 2050 ca bon neu ali y. Adop ing he ci cula
economy p inciple is es ima ed o c ea e abou 700,000 new jobs wi h an addi ion o 0.5% o he bloc’s
GDP (Eu opean Commission, 2020). Fu he mo e, swi ching o CE will p o ec he en i onmen by slow-
ing down he u iliza ion o na u al esou ces and limi ing biodi e si y loss, educing aw ma e ial
dependence as he wo ld’s popula ion con inues o g ow (Eu opean Pa liamen , 2023).
2.3.1 Ci cula economy and economic pe o mance
Resea ch sugges s ha adop ing a CE model in he EU can posi i ely impac economic g ow h and
enhance an o ganiza ion’s sus ainabili y pe o mance (Dey e al., 2022). Busu (2019) and Vu a e al.
(2018) ound ha esou ce p oduc i i y and eal economic g ow h imp o e wi h highe ecycling a es
and inc eased in es men in esea ch and inno a ion. Busu (2019) elucida es by iden i ying c i ical eco-
nomic ac o s d i ing he de elopmen o he ci cula economy in he EU, including esou ce p oduc i -
i y, labo employed in en i onmen al p o ec ion, ecycling a es, and enewable ene gy use. Geo ge
e al. (2015) p opose a heo e ical model sugges ing ha en i onmen al quali y imp o emen s a e no
di ec ly linked o economic g ow h bu o inc eases in he en i onmen al sel - enewal a e o ecycling
a io. Acco ding o Ho bach and Ramme (2019), i ms wi h ci cula economy inno a ions expe ience
g ow h in u no e and employmen , indica ing a be e inancial s anding despi e no signi ican impac
on labo p oduc i i y. Hysa e al. (2020) u he suppo his iew, emphasizing he impo ance o sus-
ainabili y, inno a ion, and in es men in ini ia i es ha p oduce no was e in p omo ing economic
g ow h. F om his pe spec i e, G dic e al. (2020) unde sco e he po en ial o he ci cula economy o
ensu e economic and GDP g ow h while educing na u al esou ce use and enhancing en i onmen al
p o ec ion. Mo e ecen ly, Dey e al. (2022) ound ha CE adop ion can p oduce supe io en i onmen al
pe o mance h ough ene gy and esou ce e iciency and educe was e in SMEs.
2.4. Consump ion oo p in
T ansi ioning o CE wi hin he EU equi es ha all s akeholde s educe hei consump ion oo p in .
Acco ding o he Eu opean En i onmen Agency (2023), he consump ion oo p in e e s o he o e all
Figu e 2. Ci cula economy model adop ed om Geissdoe e e al. (2020).
COGENT ECONOMICS & FINANCE 5
impac o he consump ion o goods and se ices on he en i onmen and clima e o EU ci izens,
ega dless o whe e hese goods and se ices a e p oduced. I is also an essen ial s ep owa ds he
Eu opean G een Deal and, o e all, he Uni ed Na ions’sus ainable de elopmen goals (SDGs), mainly
esponsible p oduc ion and consump ion (SDG12) (UN, 2024). The Eu opean Commission –Join
Resea ch Cen e (EC-JRC) de ised he Consump ion Foo p in indica o o assess he e ec s o consump-
ion wi hin he EU. This indica o is a p ocess-based Li e Cycle Assessmen ha akes in o accoun he
supply chain o 150 ep esen a i e p oduc s selec ed om i e a eas o consump ion, which include
housing, mobili y, ood, household appliances, and household goods (Cas ellani e al., 2021; Gen a e al.,
2022). The impo ance o moni o ing consump ion oo p in s was e-emphasized in he 2023 e ised ci -
cula economy amewo k. The e ised e sion includes new indica o s on ‘ma e ial oo p in and
esou ce p oduc i i y – o moni o ma e ial e iciency’and ‘consump ion oo p in – o moni o i EU
consump ion i s wi hin plane a y bounda ies’(Eu opean Commission, 2020).
In 2021, ood consump ion, housing, and mobili y had an en i onmen al impac in he EU, accoun ing
o 48%, 19% and 15%, espec i ely. S udies show ha he consump ion oo p in s o EU ci izens a e
high and mos likely o inc ease u he by 2030 based on he p esen ends, hus exceeding he EU’s
ai sha e o plane a y bounda ies (Eu opean En i onmen Agency, 2023). No ably, al hough he alues
emained highe in 2021 han in 2010, his was also amids he Eigh h En i onmen Ac ion P og amme’s
call o he EU o educe i s consump ion oo p in conside ably (Eu opean En i onmen al Agency,
2024). Figu e 3 below summa izes he consump ion oo p in s o he 27 EU Membe S a es in 2021 com-
pa ed o 2010. As shown in he Figu e, he di e ence be ween he highes and he lowes wo S a es is
abou six old.
O e all, unde s anding he consump ion oo p in s o EU esiden s p o ides aluable insigh s in o he
en i onmen al and clima e impac o consump ion pa e ns and can shape policies o suppo hem.
This ansi ion o CE is a sha ed esponsibili y a a ious le els o go e nmen and s akeholde s (OECD,
2024a), each ha ing di e en oles in he o m o p essu e exe ed (Yu e al., 2022). Fo example, he
na ional and local go e nmen s can collabo a e as p omo e s and enable s o CE (OECD, 2024a), and
consume s can adap hei consump ion pa e ns o minimize hei consump ion oo p in . P e ious
s udies ound ha s akeholde p essu e can ca alyze a i m o become mo e en i onmen ally iendly
and p oduce esou ce-e icien p oduc s (Pinhei o e al., 2022). Rod 
ıguez-Esp
ındola e al. (2022) a gued
ha he cus ome , as a s akeholde , can p essu e an o ganiza ion o adop CE p inciples. Howe e , his
equi es ci izens o ha e con idence in he go e nmen ’s policies.
Figu e 3. Consump ion oo p in s o EU coun ies in 2010 and 2021 adop ed om he Eu opean En i onmen Agency (2024).
6 O. M. ADEWUMI ET AL.
2.5. Go e nance-induced con idence
Acco ding o he O ganisa ion o Economic Coope a ion, ‘ us in go e nmen e e s o he p opo ion
o indi iduals who exp ess us in hei na ional go e nmen ’(OECD, 2024b)
1
. T us is o wo ypes: us
acco ded o impe sonal bodies like he go e nmen and us gi en o people. The us gi en o people
is u he ca ego ized as a pa icula ised us o people we know and gene alized o social us o
s ange s (Mu ingani, 2022). Se e al empi ical s udies show ha good go e nance p ac ices impac he
a i udes and ci izens’beha io owa d go e nmen policies (Mansoo , 2021; Mu ingani, 2022). This iew
is suppo ed by Mawu o e al. (2023), who a gue ha he quali y o go e nance can mode a e he ela-
ionship be ween CE and ca bon emission such ha he emission a e educes when go e nance is pe -
cei ed o be e icien .
Con e sely, declining us in he go e nmen indica es undamen al dissa is ac ion (Ci in, 1974),
educing he go e nmen ’s capaci y o add ess public policy conce ns (Chanley e al., 2000). To his
e ec , i is logical ha he abili y o he go e nmen o p omo e g een p ac ices equi es educing con-
sump ion oo p in s (Mawu o e al., 2023). In a panel da a s udy (1996–2017), Baloch e al. (2019) dem-
ons a ed he nega i e associa ion be ween go e nance and ca bon emission in B azil, Russia, China,
and Sou h A ica, commonly known as BRICS. In his ashion, Mu ingani (2022) a gued ha us ma e s
o egional economic g ow h and emphasized he need o de elop in e en ions o gene a e us .
T ansi ioning o CE, which would educe he consump ion oo p in , is a op-down policy d i en by he
EU-le el and na ional go e nmen s. Howe e , he success o ailu e o his policy depends on he ex en
o which ci izens ha e con idence in hei go e nmen s and ins i u ions o make he igh decisions.
P e ious s udies show an associa ion be ween us in public ins i u ions and ou comes (P ice e al.,
2023). The e o e, public us can be essen ial o ackling long- e m socie al challenges such as educing
consump ion oo p in s o ansi ioning o CE.
3. Resea ch me hod
3.1. Da a and sou ces
Wi h he exemp ion o GDP pe capi a (pe capi a g oss domes ic p oduc ), his in es iga ion employs a
da ase om he Eu opean Commission online sou ce, ie he Eu os a da abase o 27 Eu opean Union
membe s a es.
2
The panel’s GDP pe capi a da ase was ob ained om he Wo ld Bank da abase (The
Wo ld Bank, 2024).
3
The una ailable alues o GDP pe capi a in 2023 and consump ion oo p in o
2022 and 2023 we e compu ed om he a e age alues o he p e ious yea s o ensu e balanced panel
da a co e ing 2014 o 2023. Supplemen a y Appendix Table A1 con eys o he essen ial in o ma ion
abou he da ase , such as desc ip ion and me ic in o ma ion (see Supplemen a y Appendix).
3.2. Va iables
Rega ding economic pe o mance indica o s, se e al al e na i es o GDP ha e been p oposed in he li -
e a u e, including he Human De elopmen Index (HDI) (Cos anza e al., 2009; an den Be gh, 2009).
None heless, B ock and Ra hbu n (2009), B own (2023), and B igh Hope In e na ional (2023) ecommend
he ele ance o GDP pe capi a, pa icula ly o i s e icacy in compa a i e analyses ac oss na ions wi h
signi ican ly di e gen popula ion sizes. Along his line, his s udy’s p ima y independen a iable in lu-
encing economic well-being is ‘ci cula business ac i i ies.’Ho bach and Ramme (2019) posi ha i ms
implemen ing inno a ions in he ci cula economy wi ness an upswing in bo h u no e and employ-
men , sugges ing an imp o ed inancial s a us, albei wi hou a subs an ial e ec on labo p oduc i i y.
In his con ex , i indica es ha ci cula business ac i i ies could po en ially bols e economic and GDP
g ow h while concu en ly diminishing he u iliza ion o na u al esou ces and augmen ing en i onmen-
al p o ec ion (Donaghy, 2022; Sany
e-Mengual & Sala, 2023).
The ‘Go e nmen ’s con idence’is ano he c ucial a iable in luencing economic pe o mance. The
unde lying p emise is ha public us is c i ical in add essing las ing socie al challenges, such as dimin-
ishing consump ion oo p in s o ansi ioning owa ds he ope a ions o a CE. Exis ing li e a u e demon-
s a es a co ela ion be ween us in public ins i u ions and consequen ial ou comes (P ice e al., 2023).
COGENT ECONOMICS & FINANCE 7
nega i e impac o a decline in public us in he Uni ed S a es o Ame ica. So, lacking public us could
hinde he p omo ion o c i ical domes ic policies (Chanley e al., 2000).
6. Conclusions
6.1. Policy implica ions
This s udy sugges s ha managing he consump ion oo p in has signi ican implica ions o op imizing
he economic g ow h impac o ci cula business ac i i ies in EU coun ies. Howe e , he ela ionship
be ween consump ion oo p in and economic g ow h op imiza ion is nuanced. While ci cula business
ac i i ies imp o e economic g ow h, inc easing he consump ion oo p in educes his g ow h e ec
sligh ly, decoupling en i onmen al impac s om economic g ow h. No e ha he consump ion oo p in
has a educed nega i e economic impac , leading o diminished en i onmen al consequences. This scen-
a io indica es ha GDP is g owing as e han he nega i e economic impac o consump ion oo p in ,
a no ion o ela i e decoupling. The implica ion is ha while ci cula i y can enable economic g ow h,
he ela i e g ow h impac associa ed wi h he en i onmen al consequence o consump ion oo p in is
subop imal. Thus, imp o ed consump ion oo p in managemen becomes impe a i e o achie ing sus-
ainable and op imal economic g ow h impac o ci cula business ac i i ies ega ding absolu e decou-
pling (see Sany
e-Mengual & Sala, 2023). In his con ex , policies p omo ing ci cula business ac i i ies
should p io i ize e icien ly educing he en i onmen al consequences o consump ion oo p in s u he
o ensu e long- e m sus ainabili y and op imiza ion. This could be achie ed i policymake s implemen
mo e e ec i e s a egies ega ding ba ie s and oppo uni ies associa ed wi h ci cula business ac i i ies
o os e e icien CE ope a ions owa d en i ely deca bonizing he EU coun ies.
Besides, since ci cula economy ac i i ies incen i ize imp o ing peoples’economic well-being, ele an
policy o mula ion o ci cula economy pa icipa ion can be scaled up h ough (in) di ec public and p i-
a e in es men ins umen s. These in es men p io i ies can be pilo ed h ough en ep eneu ship ac i -
i ies o s a ups, esea ch and de elopmen ac i i ies ac oss he sec o s o he economy, and he
adop ion o inno a i e ci cula economy p ac ices ac oss households. Addi ionally, policy implica ions
a ising om hese indings include he impo ance o implemen ing ele an policies o incen i ize
imp o emen in us and con idence in go e nance. This iew implies ha he go e nmen s o he EU
membe s a es should u he seek o imp o e public us h ough a mo e consis en and anspa en
communica ion o go e nmen in en ions and policies. D awing on his insigh , in en ionally aising pub-
lic awa eness abou he impo ance o esponsible consump ion pa e ns can be c ucial. This e o high-
ligh s he en i onmen al bene i s and economic ad an ages o a CE. In ligh o his obse a ion, i
ele an and imp o ed esou ces ha p omo e ci cula economic ac i i ies a e eadily a ailable, hey can
u he encou age g ea e public pa icipa ion in hese sus ainable business p ac ices. This iewpoin
unde sco es he necessi y o complemen ing economic conside a ions wi h social, ins i u ional, and
en i onmen al ac o s o op imize indi idual well-being. Meanwhile, he o e all heo e ical and p ac ical
implica ion and ele ance o consump ion oo p in and ecycled ma e ial canno be o e emphasized.
Speci ically, he esul u he ou lines he ele ance o a hyb id li e-cycle assessmen ha o e s de ailed
ups eam and downs eam en i onmen al impac s o con en ional and ecycled ma e ials.
6.2. Limi a ions and u he esea ch
This s udy ins i u es aluable insigh s ha con ibu e o ex an esea ch on CE models. While so, i has
some ca ea s. Fi s , while he s udy looks in o nine yea s o ci cula i y e ec on economic g ow h, o he
p oxies o ci cula business and economic ac i i ies wi h ex ended ime co e age could p o ide dis inc
insigh s and b oade policy ele ance. Second, he analysis pe spec i e in he cu en s udy ocuses on
coun y-le el e ec s, whe eas he missing egional indus y and sec o -le el impac s pose a limi a ion.
This ela ionship could be in es iga ed u he by including egional and sec o -le el/indus y he e ogen-
ei y pe spec i es o unde s and ou s udy con ex be e , hus p o iding addi ional opical in o ma ion.
Las ly, as he cu en s udy p o ides an unde s anding o ci cula economic g ow h e ec op imiza ion
h ough consump ion oo p in managemen , he deg ee o which he e ec op imizes is beyond ou
14 O. M. ADEWUMI ET AL.

analysis. To his end, u u e esea ch in es iga ing he e iciency e ec o he consump ion oo p in
om he con ex o he cu en s udy is ele an o imp o ed unde s anding.
6.3. Concluding ema ks
Gi en a new pa hway o sus ainable g ow h and a o emos componen o he Eu opean G een Deal,
his s udy u he pu s he EU’s ci cula economy in he spo ligh . Conside ing he panel o 27 EU mem-
be s a es, he s udy in es iga ed he ole o ci cula business ac i i ies, consump ion oo p in , and con-
idence in go e ning ins i u ions on income le el om 2014 o 2023. Insigh ul esul s we e documen ed
by implemen ing he dynamic panel model wi h sys em GMM es ima o s and o he ele an empi ical
app oaches. These esul s include ha (i) peoples’pa icipa ion in ci cula business and economic ac i -
i ies is a posi i e and di ec d i e o gene al income le el, (ii) while income le el is posi i ely in luenced
by pa icipa ion in ci cula economy ac i i ies, consump ion oo p in mode a es he posi i e e ec , and
(iii) public con idence in go e ning ins i u ions is-
a- is SDG16 a ec income le el posi i ely. O e all, he
s udy emphasized ha while ci cula business ac i i ies imp o e he economic well-being o EU coun-
ies, he e is a need o manage he consump ion oo p in u he o op imal economic g ow h. Then,
i p esen s some implica ions and o e s possible policy o mula ions.
Acknowledgmen
Au ho s app ecia e he sel less se ice o he Edi o and anonymous e e ees.
Au ho con ibu ions
Olugbenga Michael Adewumi is in ol ed in concep ualiza ion, da a cu a ion, o mal analysis, me hodology, he
in oduc ion sec ion, he o iginal d a , and edi ing.
And ew Alola Adewale is engaged in concep ualiza ion, da a cu a ion, me hodology, discussion o esul s, w i ing
–o iginal d a , and edi ing.
Chukwuemeka Echebi i is in ol ed in concep ualiza ion, da a cu a ion, w i ing o he li e a u e sec ion, w i ing –
he o iginal d a , and edi ing.
Disclosu e s a emen
No po en ial con lic o in e es was epo ed by he au ho (s).
No es
1. Gene al go e nmen –T us in go e nmen –OECD Da a.
2. Da abase –Eu os a (eu opa.eu).
3. Wo ld De elopmen Indica o s jDa aBank (wo ldbank.o g).
4. The endogenei y issue associa ed wi h Equa ion (2) is elimina ed by ans o ma ion o emo e he i m ixed
e ec using a i s -di e encing app oach (de ail in A ellano & Bond, 1991). Also, ollowing Blundell and Bond
(1998), he es ima ion o Equa ion (2) ollowed Equa ion (3) and was pe o med wi h a sys em GMM es ima ion
s a egy o elimina e signi ican ini e sample biases and possible endogenei y issues (de ail in Roodman, 2009).
Funding
No unding was ecei ed o his s udy.
Abou he au ho s
Olugbenga Michael Adewumi is a esea ch a ilia e a he Inland Business School a Inland No way Uni e si y o
Applied Sciences, No way. He has a doc o al backg ound in inno a ion and business economics. He also has a dou-
ble mas e ’s deg ee in in e na ional managemen , s a egy, and music business managemen om he Uni e si y o
Agde , No way. His esea ch in e es s include inno a ion and business economics, e iciency and managemen , and
ma ke ing s udies.
COGENT ECONOMICS & FINANCE 15
Chukwuemeka Echebi i is an Associa e P o esso a Inland No way Uni e si y o Applied Sciences (INN), No way. He
holds an MSc in Business om No d Uni e si y, No way, and a PhD in Inno a ion in Se ices om INN. His esea ch
in e es s include wo king li e, employee-d i en inno a ion, employee empowe men , leade ship beha io , and sus-
ainabili y. He has p e iously wo ked in banking and insu ance.
D . And ew Adewale Alola ea ned a PhD in Economics om Eas e n Medi e anean Uni e si y, Cyp us, and holds an
MSc in Applied Ma hema ics and Compu e Science om he same ins i u ion. Be o e joining he CREDS-Cen e o
Resea ch on Digi aliza ion and Sus ainabili y a Inland No way Uni e si y o Applied Science in Oc obe 2022, he
was an Assis an P o esso a he Uni e si y o Vaasa in Finland. He augh a Nis¸an as¸ıUni e si y and Is anbul
Gelisim Uni e si y in Tu key. D . Alola has also been a ilia ed wi h ins i u ions like he Lebanese Ame ican
Uni e si y, Sou h U al S a e Uni e si y, and he Uni e si y o Johannesbu g. His esea ch ocuses on Sus ainabili y,
Ene gy, and En i onmen al Economics, wi h o e 200 publica ions in p es igious jou nals, and he has been lis ed in
he Top 2% o Global Scien is s in Ene gy and En i onmen since 2020.
ORCID
Olugbenga Michael Adewumi h p://o cid.o g/0000-0002-8562-5821
Da a a ailabili y s a emen
Based on he Eu os a and Wo ld Bank da abases, an analysis was conduc ed, and new da a was gene a ed. These
da ase s can be accessed eely and a e publicly a ailable a Da abase –Eu os a (eu opa. eu) and Wo ld
De elopmen Indica o s jDa aBank (wo ldbank.o g). No da a canno be sha ed o e hical, p i acy, o secu i y
conce ns.
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