| Abstract | Purpose: The study seeks to address this research gap by empirically analyzing contribution of the circular economy on economic growth in the 11 European New Member States (NMS 11) from 2001 to 2021. In fact, the study specifically investigates how well the circular economy works as a tool for achieving sustainable development.
Need for the study: Although there is a lot of discussion about the circular economy in economic studies, less focus is paid on the transitioning to a circular economy in NMS 11. Different NMS 11 are adopting measures on the journey to circular economy at varying degrees.
Methodology: Motivated by the existence of stationary in first differences, the study tests the long run cointegration relationship between various pairs of variables (e.g., real GDP with each of the circular economy variables for panel of countries) in the second stage of our empirical research using the panel cointegration technique developed by Pedroni (1999, 2004) and Kao (1999) cointegration tests. In the third stage, considering the long-term relationship, we use the standard Pooled Mean Group Estimator (PMG) and the Mean Group Estimator (MG) to look at the stability of the short- and long-term coefficients.
Findings: The study's findings revealed significant variations regarding the concept of the circular economy and its indicators in the economic growth of the NMS 11 countries in the long run and short run. Due to the low consumption of renewable energy in these countries, these results likely indicate a lack of understanding about the effective utilization of renewable energy sources. Additionally, another reason might be the insufficient funding to integrate more renewable energy sources into these nations' energy mixes.
Practical Implications: Ensuring steady and sustainable economic growth can be achieved through the development of low-carbon technologies, the increased use of renewable energy sources, the creation of an appropriate energy policy, and the implementation of necessary reforms and actions. Reducing dependence on non-renewable and fossil fuel energy sources and expanding access to clean, renewable energy are particularly crucial for maintaining economic growth.
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