E-waste, financial development nexus in eu countries: Insights from novel circular economy determinants

Abstract

The “Circular economy” plays an important role in realizing the Sustainable Development Goals (SDGs), helping to optimize resources and minimize environmental impact. At the same time, many previous studies have observed the positive impact of financial tools that can support and promote the development of a sustainable environment. However, the relationship between the Circular economy (CE), Financial development (FD), and Electronic waste (WEEE) has not yet been comprehensively studied. With the EU being the region with the highest per capita electronic waste in the world, this study focuses on the 27 EU countries during the period 2010-2020 to assess the impact of CE and FD on WEEE. The study applies advanced econometric methods such as FGLS, PCSE, and dynamic threshold analysis to ensure reliable results. The results show that both CEI and FD have a negative impact, helping to reduce electronic waste. However, if CE develops excessively, the environmental benefits may be nullified. Additionally, the combination of CEI and FD causes a rebound effect in the circular economy, diminishing the effectiveness of waste reduction. These findings provide important insights for policymakers in designing sustainable circular economy development strategies and financial development to minimize electronic waste without facing backlash when the two development factors reach their thresholds.