Macroeconomic performance and progress towards a circular economy in developing countries

While the current share of global waste in developing countries is relatively small, it has peaked in momentum in recent years and continues to grow exponentially. In this chapter, we investigate the effect of macroeconomic performance on the progress towards a circular economy proxied by the recycling rate of recyclable waste in developing countries. To do so, we employ econometric methods and use historical data for 75 developing countries for the period spanning from 1995 to 2019. The findings from the empirical analysis reveal that an increase in real GDP is associated with an increase in recycling rates. However, the subsample analysis shows that the estimates are statistically insignificant for low-income countries, while they are significant for lower-middle-income and upper-middle-income countries. This suggests that the transition from a linear to a circular economy in low-income countries requires effective policies for waste management as the level of economic development is insufficient to yield a significant recycling performance.