Relationship between recycling, circular economy and eco‐innovation in Europe. Application of a dynamic network data envelopment analysis model

Abstract

Monitoring of European‐level circular economy (CE) efficiency requires more research than does currently exists in the body of literature on CE. In this regard, this research aims to answer two research questions. Firstly, to be efficient in the implementation of CE at a macroeconomic level, should there be a relationship between the efficiency of the three phases of CE (efficiency in recycling, efficiency in the implementation of CE and efficiency of eco‐innovation)? To answer this question, we use decoupling theory. Secondly, are the three phases of CE related from the point of view of dynamic efficiency? To answer this question, we use dynamic efficiency theory.In accordance with both of these theories, we establish a circular relationship between recycling, CE and eco‐innovation. We test this circular relationship through the application of the dynamic network data envelopment analysis (DNDEA) model of Tone and Tsutsui. The analysis is based on Eurostat data for the period of 2016 to 2022 for 27 European countries.This work contributes to the advancement of the research via (1) the development of a model for measuring the transversal and longitudinal efficiency of the CE and (2) the findings of positive and significant relationships between the efficiency ratios of the three fundamental phases (recycling, CE and eco‐innovation). This leads us to affirm that the countries studied that have managed to be efficient in recycling have also been in the implementation phase of CE and eco‐innovation.