Circular economy in the concept of sustainable development: paradoxes of the international macroeconomic ebvironment and financing green growth

Grod Myhailo
postgraduate student, Educational and Scientific Institute of International Relations Taras Shevchenko National University of Kyiv, Kyiv, E-mail: grodmihail@ukr.net, ORCID ID: https://orcid.org/0000-0003-2570-869X

Reznikova Nataliia
Doctor of Economic Sciences, Professor, Professor of the Department of World Economy and International Economic Relations, Educational and Scientific Institute of International Relations Taras Shevchenko National University of Kyiv, Kyiv, E-mail: nreznikova@knu.ua, ORCID ID: https://orcid.org/0000-0003-2570-869X

Cite this article:

Grod M., Reznikova N. (2023) Circular economy in the concept of sustainable development: paradoxes of the international macroeconomic ebvironment and financing green growth. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Tsyrkuliarna ekonomika u kontsepti staloho rozvytku: paradoksy mizhnarodnoho makroekonomichnoho seredovyshcha ta finansuvannia zelenoho zrostannia; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 7-8 (308-309), pp. 155-166.

Abstract

In the process of rethinking approaches to highlighting the general characteristics of the concepts of sustainable development and the circular economy, we have received a number of scientific results and theoretical generalizations. Further development was given to the understanding of the circular economy, which made it possible to identify it as a new system of relations that meets the requirements of the trinity of social, economic and ecological systems, which is formed under the influence of a combination of dynamic factors (climate crisis, resource crisis, energy crisis; breaking value chains; demand shocks and shoks of supply) and global trends of development (green, energy and digital transition; Industry 4.0; growing dependence on strategic resources), is based on a system of rules, norms, institutions that determine implementation of new business strategies at all phases of the economic cycle (production, distribution, exchange, consumption) on the principles of maximizing the cost of resources, optimizing reserves, eco-efficiency and innovation, which allows for a gradual abandonment of the extensive consumption of natural resources, the formation of new ways of creating value and income generation, new opportunities to reduce costs, contribute to the innovation of production processes, sustainable resource use, the development of productive forces and the achievement of a qualitatively new green economic growth, provided with innovative aspects of balanced and sustainable development. The purpose of the study is to rethink approaches to highlighting the general characteristics of the concepts of sustainable development and circular economy, which will allow us to provide further development with a generalization illuminated by its fundamental significance that affects the knowledge of the outlined phenomena. It has been established that the study of the circular economy requires analytical tools of precisely the transdisciplinary approach as a means of comprehending the totality of interdisciplinary interactions at a level that does not limit the horizon of the scientific worldview, allowing one to know the objective essence of the studied objects in interconnection as a form of reproduction of dynamic social, economic, political mutual influences without rigid reference to geographical borders and taking into account the distribution of powers of actors at all levels of international economic policy. The transition to the principles of constancy and circularity, in essence, involves the full implementation of intergenerational relations, which affect the specifics of the implementation of fiscal, debt policy and the policy of structural transformation in particular. The implementation of the circular transition will not be ensured solely by regulatory (fiscal-monetary, customs-tariff, restrictive and stimulating) levers, but will require a value reset of consciousness and controlled formatting of the scientific worldview, which will change the perception of “norm”, “values”, “and choice in favor of certain business practices. It is expected that this will form a request for an increase in the role of the state in strategic development planning (including the development of public-private partnerships and an increase in public procurement) and the direction of spontaneous market forces by regulatory tools of international organizations towards sustainable development (such as the CSR, ESG). The scale of cyclic activity is limited by a number of market failures, and can be partially eliminated using digital technologies. The approach of distribution of intergenerational obligations, which, in fact, imperatives the need for changes in the practice of market economy in the short and medium term in order to obtain effects in the long term, should be balanced by an approach that takes into account the asymmetry of sustainable promotion assumed by the implementing countries. The integration of non-economic factors into the concept of development implies the fundamental nature of systemic changes in the international division of labor.

Keywords

circular economy, sustainable development, Industry 4.0, economic development, green growth, international macroeconomic environment, regulatory policy, financial instruments, green transition, digital technologies, business models, intergenerational relations.

JEL classification: О440, P480, P510, Q010, Q560, Q570; DOI: 10.32680/2409-9260-2023-7-8-308-309-155-166

UD classification: 339.926:339.972:339.982

References

1. Zvarych, I. Ya. (2019). Hlobal'na tsyrkuliarna ekonomika: «ekonomika kovboiv» vs «ekonomika kosmichnoho korablia» [Global circular economy: "cowboy economy" vs "spaceship economy"], VPTs «Ekonomichna dumka TNEU», Ternopil', Ukraine. [Іn Ukrainian].
2. Zvarych, I. Ya. (2018). Tsyrkuliarna ekonomika: kontsepty ta variatsii. Chetverta promyslova revoliutsiia: zmina napriamiv mizhnarodnykh investytsijnykh potokiv [Circular economy: concepts and variations. The fourth industrial revolution: changing directions of international investment flows], Osadtsa Yu.V., Ternopil', Ukraine. [Іn Ukrainian].
3. Zvarych, I. Ya. (2018). Evolution of conceptual systems: circular economy & inclusive economy. Naukovyy pohlyad: ekonomika ta menedzhment, 3(61), 15-22. [Іn Ukrainian].
4. Zvarych, I., Krysovatyy, A. and Zvarych, R. (2018). Circular economy in the context of alterglobalization. Journal of International Studies, 11(4), 185-200.
5. Rashid, A., Asif, F. M. A., Krajnik, P. and Nicolescu, C. M. (2013). Resource Conservative Manufacturing: an essential change in business and technology paradigm for sustainable manufacturing. Journal of Cleaner Production, 57, 166–177.
6. Webster, K. (2017). The Circular Economy: A Wealth of Flows. Ellen MacArthur Foundation, Cowes, UK.
7. Ivashchenko, O. (2020). Political economy of sustainable development: institutional levers for ensuring transformational management. Materialy VII Mizhnarodnoyi naukovo-praktychnoyi konferentsiyi. Stratehiia rozvytku Ukrainy: finansovo-ekonomichnyj ta humanitarnyj aspekty [Proceedings of the Sixth International Scientific and Practical Conference. Development strategy of Ukraine: financial, economic and humanitarian aspects]. Informatsijno-analitychne ahentstvo, Kyiv, Ukraine, 235-238. [Іn Ukrainian].
8. Dubel, M. (2022). Circular economy as a mechanism for achieving the goals of sustainable development in the conditions of globalization and digitalization of the world economy. Ekonomika i suspilʹstvo, 39. Retrieved from https://doi.org/10.32782/2524-0072/2022-39-13. [Іn Ukrainian].
9. Geissdoerfer, M., Savaget, P., Bocken, N. and Hultink, E. (2017). The Circular Economy – A new sustainability paradigm? Journal of Cleaner Production, 143, 757–768.
10. Grod, M. (2023). On the issue of solidarization of the concepts of "circular economy" and "sustainable development" in the paradigm of sustainability: сorporate social performance and eco-innovationat the center of r-strategies of business activity. Investytsiyi: praktyka ta dosvid, 3, 87-94. [Іn Ukrainian].
11. Szydlik, M. (2012). Generations: Connections across the life course. Advances in Life Course Research, 17(3), 100-111.
12. White, J. (2013). Thinking generations. British Journal of Sociology, 64(2), 216–247.
13. Lerner, A. (1994). Interest Theory – Supply and demand for loans or supply and demand for cash? Review of Economic Studies, 26(2), 88-91.
14. Musgrave, R. (1959). The Theory of Public Finance. A Study in Public Economy. McGrow Hill Book Company, London, UK.
15. Reznikova, N. and Panchenko, V. (2022). Minni polia mizhnarodnoi ekonomichnoi polityky: iak krainam ne vtratyty zdatnist' do rozvytku [Minefields of international economic policy: how countries do not lose their ability to develop]. Ahrar Media Hrup, Kyiv, Ukraine. [Іn Ukrainian].
16. Grod, M. and Cherednychenko, V. (2023). Circular strategies and circular business models: digitalization as a key factor in scaling the circular economy. Efektyvna ekonomika, 2. Retrieved from http://doi.org/10.32702/2307-2105.2023.2.61 [Іn Ukrainian].
17. The World Bank (2017). Environmental and Social Framework. Retrieved from https:// thedocs.worldbank.org/en/doc/837721522762050108-0290022018/original/ESFFramework.pdf
18. The World Bank (2019). World Bank Environmental and Social Policy for Investment Project Financing. Retrieved from https://thedocs.worldbank.org/en/doc/360141554756701078- 0290022019/original/WorldBankEnvironmentalandSocialPolicyforInvestmentProjectFinancing. pdf
19. The World Bank (2022). Environmental and Social Standards (ESS). Retrieved from https://www.worldbank.org/en/projects-operations/environmental-and-social-framework/brief/ environmental-and-social-standards
20. NCCS (2020). NGOs and Charitable Organizations Global Market Opportunities and Strategies Report. Retrieved from https://nccs.urban.org/project/nonprofit-sector-brief
21. Vicentini, F. (2020). The implementation of circular economy in an NGO business model: 2hands Organization's case study. Retrieved from http://tesi.luiss.it/31584/1/229661_ DAGOSTINO_MARIAFRANCESC.pdf
22. Grod, M, (2023). Theoretical approaches to determining the place of the circular economyin the methodology of the green economy and its connection with the bioeconomy,the bio-based economy and the bio-based circular carbon economy. Investytsiyi: praktyka ta dosvid, 4, 103-109. [Іn Ukrainian].
23. Sariatli, F. (2017). Linear Economy Versus Circular Economy: A Comparative and Analyzer Study for Optimization of Economy for Sustainability. Visegrad Journal on Bioeconomy and Sustainable Development, 6(1), 31-34.
24. Shcherbak, V., Ganushchak-Yefimenko, L., Nifatova, O., Fastovets, N., Plysenko, H., Lutay, L., Tkachuk, V. and Ptashchenko, O. (2020). Use of key indicators to monitor sustainable development of rural areas. Global Journal of Environmental Science and Management, 6(2), 1-16. Retrieved from https://www.gjesm.net/article_37320_252b7cd6e0abd606f0b65673d9159d64.pdf
25. Ellen MacArthur Foundation (2020). The EU’s Circular Economy Action Plan. Retrieved from https://www.ellenmacarthurfoundation.org/assets/downloads/EU-Case-Studyjune2020-EN. pdf
26. Andersen, M. S. (2007). An introductory note on the environmental economics of the circular economy. Sustainability Science, 2, 133–140.
27. Allwood, J. M. (2014). Squaring the circular economy: the role of recycling within a hierarchy of material management strategies. Retrieved from https://doi.org/10.1016/B978-0-12- 396459-5.00030-1
28. Grod, M. and Cherednychenko, V. (2023). Identifying characteristics of the circular economy in terms of productivity: drivers and barriers to circular transition. Efektyvna ekonomika, 1. Retrieved from https://doi.org/10.32702/2307-2105.2023.1.42 [Іn Ukrainian].
29. Govindan, K. and Hasanagic, M. (2018). A systematic review on drivers, barriers, and practices towards circular economy: a supply chain perspective. International Journal of Production Research, 56(1-2), 278-311.
30. Hughes, N. and Ekins, P. (2018). The Role of Policy in Unlocking the Potential of Resource Efficiency Investments. Retrieved from https://www.researchgate.net/publication/327151271_ The_Role_of_Policy_in_Unlocking_the_Potential_of_Resource_Efficiency_Investments_The_ Economics_and_Politics_of_Financing_the_Resource_Transition
31. World Business Council for Sustainable Development (WBCSD) (2019). CEO Guide to the Circular Bioeconomy. Retrieved from https://www.wbcsd.org/Archive/Factor-10/Resources/ CEO-Guide-to-the-Circular-Bioeconomy
32. Global Resources Outlook (2019). Natural Resources for the Future We Want. Retrieved from https://www.resourcepanel.org/ sites/default/files/documents/document/media/unep_252_ global_resource_outlook_2019_web.pdf
33. European Commission (2018). Impacts of Circular Economy Policies on the Labour Market. Final Report and Annexes. Retrieved from https://circulareconomy.europa.eu/platform/ sites/default/files/ec_2018_-_impacts_of_circular_economy_policies_on_the_labour_market.pdf
34. Millar, N., Mclaughlin, E. and Börger, T. (2019). The circular economy: Swings and roundabouts? Ecological Economics, 158, 11–19.
35. Accenture (2014). Circular Advantage: Innovative Business Models and Technologies to Create Value in a World without Limits to Growth. Retrieved from https://www.accenture. com/t20150523t053139__w__/us-en/_acnmedia/accenture/conversionassets/dotcom/ documents/global/pdf/strategy_6/accenture-circular-advantage-innovative-business-modelstechnologiesvalue-growth.pdf
36. Osaulenko, O., Yatsenko, O., Reznikova, N. and Rusak, D. (2020). The Productive Capacity of Countries Through the Prism of Sustainable Development Goals: challenges to international economic security and to competitiveness. Financial and credit activity: problems of theory and practice, 2(33), 492-499.