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

Abstract

As circular business activity is a pivotal component of the European Green Deal, this study examines its impact on economic prosperity by examining how the model influences income levels. The investigation spans a panel of 27 European Union (EU) member countries from 2014 to 2023, factoring in the income effect of consumption footprint and public trust in governing institutions. Based on the system GeneralizedMethod of Moments (GMM) estimators of the dynamic panel model, the results reveal that circular business activities enhance economic well-being. However, the interaction effect of consumption footprint limits the full potential of this enhancing effect. Moreover, as public confidence in government institutions improves, so does economic well-being. This perspective underscores the pivotal role of trust in bolstering the economic benefits of circular business activities, leading to more robust societal conditions. Overall, the study suggests that while circular business activities can improve economic well-being, efficient management of the consumption footprint is crucial for optimization. Its policy implication emphasizes balancing economic aspects with social, institutional, and environmental elements to enhance individual well-being. Thus, the findings contribute to the literature and provide valuable policy insights into circular economy models, opening up avenues for future consideration.