The circular economy is rising up the development agenda. It appears to offer a credible industrialization pathway in an era of digital disruption and automation. It will help create value out of challenges, such as resource scarcity and pollution, that could otherwise undermine development gains. It may even provide new thinking for how to make the difficult transition from informal to formal employment.
Our conversations with developing-country stakeholders suggest that the CE concept might be best articulated as an industrialization strategy that helps safeguard development gains. The CE will often support existing industrial objectives, but it may also open up new perspectives on the future of industrial strategy.
Rather than being imposed from the outside, CE approaches will need to be co-developed with and ultimately led by in-country organizations. In India, the collaboration between the National Institution for Transforming India (NITI Aayog), The Energy and Resources Institute (TERI), the European Commission and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on the InRP, along with the development of a national strategy on resource efficiency, offers one interesting model for sustained collaboration. Many organizations based in developing countries have existing knowledge on issues such as waste management, industrial development and the integration of informal sectors into the formal economy; such knowledge could be expanded into the CE sphere.
Rather than being imposed from the outside, CE approaches will need to be co-developed with and ultimately led by in-country organizations
For donors and governments, strengthening the business case for CE-related investments will depend on better data and the sharing of lessons from the failures as well as the successes of CE approaches in different contexts. Since the policy toolkit for the CE is still being developed,78 there could be an important role for piloting to test out innovative approaches at scale in developing countries – in collaboration with OECD and BRICS countries.
Critics of the CE often question whether it is a new concept or a rebranding exercise. Many of the ideas are indeed decades old, but new technologies and increased awareness of sustainability now make it feasible to scale them up. The existence of circular activities in developing countries, and of many existing projects that seek to build on them, provides excellent political ‘entry points’ at both national and international level which can be used to advance the CE agenda. However, these initiatives are only scratching the surface at present. The ‘circular economy’ could develop into a powerful umbrella term, helping to build political momentum around a set of ideas that can be applied in and tailored to multiple sectors or cities.
A stronger criticism is that the CE is often presented without due recognition of the risks and trade-offs of particular approaches. In certain circumstances, circular approaches may be more energy-intensive or more costly than the alternatives. Or they may introduce one type of system-level thinking while missing others. Open dialogue, better evidence and more collaborative approaches can help to mitigate these concerns.
78 See, for example, a recent report by Circle Economy which explores policy levers and political entry points for accelerating the transition to a low-carbon circular economy in Europe. Circle Economy (2017), Policy Levers For a Low-Carbon Circular Economy, https://www.circle-economy.com/new-report-policy-levers-for-a-low-carbon-circular-economy/#.WhBrlxO0NE4 (accessed 18 Nov. 2017).