Economic Freedom and the Transition to a Circular Economy

The focus of this paper is to explore the effects of economic freedom on a circular economy and the channels it works. Using data from 28 EU countries over the period 2001–2021, we find that economic freedom increases resource productivity, the recycling rate of waste, and income from recycling and repair and reuse sectors. Digging deeper into the components of economic freedom, we find that the main dynamics through which economic freedom contributes to a circular economy is by promoting government size freedom, strengthening the legal system and property rights, and encouraging international trade