Circular economy outcomes in EU countries: The impact of manufacturing sectors and the moderating effects of investment, employment and trade

Countries in the European Union are transitioning from a linear to a more circular economy as they progress towards sustainable development. Drawing on knowledge-based theories, the importance of the manufacturing sector is examined in the context of these circular economy transitions. Using a fixed-effects moderated regression analysis on a panel dataset comprising European Union (EU) countries from 2010 to 2021, the analysis reveals that EU countries with a higher manufacturing base have improved circular economy outcomes. Furthermore, the findings indicate that contingent factors—including private investment in circular economy initiatives, employment in circular economy activities, and trade freedom—positively moderate the relationship between a country's manufacturing base and its circular economy outcomes. Empirical, theoretical and policy implications of these findings are discussed for the circular economy literature and future research directions are outlined.