What are the impacts of economic complexity and product proximity on nations' circularity? An empirical approach using statistical analysis.

The topic of whether economic complexity or close proximity to a product produces favorable conditions to aid nations in transitioning to the circular economy is addressed in this article. Six distinct indicators are used to assess the performance of circularity. The amount of municipal garbage, the amount of circular materials utilized, the number of circularity patents, the rate of recycling waste, the rate of recycling biowaste, and the rate of recycling electronic waste are some examples of these metrics. By using various econometric techniques (namely, a panel-corrected standard error (PCSE) model, a feasible generalized least square estimate (FGLS) model, and the two-step general method of moment (the two-step GMM), our research demonstrates how economic complexity and close proximity to a product have varied nonlinear impacts on circularity. We do, however, offer empirical proof that, particularly over the long term, a country's closeness to its products may significantly improve its performance in terms of circularity. Although economic complexity is a crucial enabler of circularity, it may also become too complicated, which could impede the process.