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A Circular Economy Model of Economic Growth with Circular and Cumulative Causation and Trade

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  • Kieran P. Donaghy

    (Cornell University)

Abstract

The idea of a circular economy, first discussed by Kenneth Boulding in the 1960s and ‘70 s and reintroduced by environmental economists David Pearce and R. Kerry Turner in 1990, is a characterization of how goods and services can be produced and consumed in an ecologically sound and environmentally sustainable manner that meets concerns of overuse of resources, waste management, and climate change, inter alia, through the conscious interlinking of disparate economic activities. The notion of circular and cumulative causation (CCC), through which certain positive and negative effects are promoted and reinforced by positive feedbacks, also is not new. George et al. (2015) have presented a theoretical circular economy model of economic growth that leads them to infer that the maintenance or improvement of environmental quality is incompatible with economic growth. However, Donaghy (2021b) has demonstrated how, when sources of CCC are introduced to the model of George et al., a different conclusion may be reached; CCC may be harnessed to bring about desirable systems properties, such as those of a circular market economy. The present paper reviews the arguments and findings of the latter two studies and extends the analysis by introducing trade between three national or regional economies in an environmentally polluting resource, other materials, and recycling technologies. Results of numerical simulation exercises suggest that there could be gains from trade in terms of progress by multiple economies in aggregate towards an international or interregional circular growth economy. The paper also suggests how aspects of the Pearce and Turner model of a circular economy not presently included in theoretical circular economy models of economic growth (closed or open) can be accommodated.

Suggested Citation

  • Kieran P. Donaghy, 2022. "A Circular Economy Model of Economic Growth with Circular and Cumulative Causation and Trade," Networks and Spatial Economics, Springer, vol. 22(3), pages 461-488, September.
    • Handle: RePEc:kap:netspa:v:22:y:2022:i:3:d:10.1007_s11067-022-09559-8
    DOI: 10.1007/s11067-022-09559-8
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    3. Dolores R. Santos-Peñate & Rafael R. Suárez-Vega & Carmen Florido de la Nuez, 2023. "A Location-allocation Model for Bio-waste Management in the Hospitality Sector," Networks and Spatial Economics, Springer, vol. 23(3), pages 611-639, September.

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