Circular economy, economic growth, and e-waste generation in EU27 countries: Further evidence from the novel circular economy index and threshold effect

The circular economy has been identified as a critical keyword for achieving the Sustainable Development Goals. Nevertheless, there is a lack of in-depth empirical literature on the impact mechanisms of the circular economy (CE) and economic growth (GDP) in mitigating e-waste generation (waste electrical and electronic equipment - WEEE). Given Europe’s leading position in e-waste generation per capita, the study aims to scrutinize the interplay between CE, GDP, and WEEE for 2010–2020. The research applies advanced econometric methods, primarily centered around the system generalized method of moment and dynamic panel threshold. It was noteworthy that different CE indicators exhibited varying effects on WEEE through the econometric analysis. Therefore, the research uniquely utilized the entropy weight method to compute a holistic composite index for the circular economy (CEI) and gained some interesting findings. Firstly, CEI significantly reduced WEEE, while GDP drove its increase. However, an overly developed CEI of 0.7616 counteracted its beneficial effect. Secondly, the synergy of CEI*GDP engendered the circular economy rebound effect, diminishing environmental benefits. Thirdly, in the circular context, the environmental Kuznets curve was validated, showcasing an inverted U-shaped pattern. Finally, the study found CEI to have different threshold effects, with thresholds of 0.2161 to inhibit WEEE, 0.2114 to avert the circular economy rebound effect, and 0.2360 to leverage GDP in reducing WEEE. These outcomes give insights to policymakers in designing sound policies targeting circular economy development and decoupling e-waste generation from economic growth towards the United Nations’ SDGs. © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2024.