Exploring the impact of circular economy practices on ecological footprint, inflation rate, and renewable energy consumption: evidence from G20 economies

The circular economy (CE) has acquired significant interest for its potential to contribute to sustainable development (SD). The present study utilizes empirical methodology, specifically panel data analysis, to examine the distinct effects and outcomes of the circular economy and its associated factors within a unified framework. The focus is on the G20 countries from 2008 to 2021. We evaluated the influence of various CE value sources (renewable energy consumption, composting rate, repair services availability, recycling rate) and a factor-analysis-derived measure of the CE on economic, environmental, and social aspects of SD. The objective was to assess the distinct effects and outcomes of CE and its components in a unified framework-the analysis utilized panel data from G20 countries from 2008 to 2021. Our findings show a substantial influence of CE in achieving SD, with positive implications for the economy, environment, and society. However, the impact of each CE value source on the SD dimensions shows variation. While renewable energy consumption (RENEC) and composting rate (CR) lessen environmental impact, recycling rate (RR) shows no significant effect, and repair services availability (RSA) increases the Ecological Footprint (EFP). Notably, RSA is the sole CE component, showing a positive economic impact at the national level. Additionally, RENEC, RSA, and RR contribute to reducing the inflation rate (INFR). Policymakers should undertake detailed impact assessments to develop effective, tailored strategies based on each country's unique goals. The findings of this study have important policy implications, particularly in terms of emphasizing targeted strategies for implementing CE practices to achieve sustainable development.