Chapter 12 Determinants of Circular Economy and Sustainable Development of European Countries

This chapter empirically investigates the main drivers of the circular economy (CE) and sustainable development (SD) of European countries. The European Union (EU) legislation imposes equal rules for the members who should be followed to achieve CE and SD. This chapter gives a critical overview of the related literature on this topic. The second part focuses on measuring the efficiency of EU countries in achieving CE and SD via a nonparametric approach. Furthermore, the results from the efficiency evaluation are used as a dependent variable in determining which economic, social, institutional, and other factors have the greatest influence on CE and SD achievements. The nonparametric approach consists of selected models of data envelopment analysis (DEA), as this is a methodology useful in constructing a ranking system based on selected criteria. The results indicate that on average, the most efficient countries were (besides Malta and Luxembourg) the Netherlands, Poland, Germany, Sweden, Denmark, France, and the United Kingdom. The worst performing ones were Cyprus, Spain, Greece, Belgium, Portugal, and Croatia. The second part of the research indicates that the resource production and corruption perception index has the greatest effect on the efficiency scores, followed by education attainment. The research and development (R&D) variable is not significant in the observed sample. Based on these results, specific policy recommendations are given at the end of this chapter.