How circular is the linear economy? Analysing circularity, resource flows and their relation to GDP

Abstract

The concept of Circular Economy (CE) has evolved significantly over the past decade, transitioning from a simple model of resource circulation to an increasingly complex and debated framework. While its primary objective remains the elimination of waste and pollution through regenerative processes, CE has encountered definitional ambiguities and criticisms. This study critically examines the prevailing circularity metrics, such as the circular material use rate or circularity and argues that such narrow definitions obscure the true potential of CE by excluding higher-value strategies like maintenance, repair, refurbishment, and remanufacturing. Through a mixed-methods analysis of global resource flows (e.g.,104 Gt input in 2020, with only 9% recycled), the study demonstrates how adjusting circularity calculations for non-recoverable materials reveals a real circularity rate of 27%, far exceeding the apparent 9%. Yet even this higher rate translates to a mere 1.4% of global GDP, underscoring the limited economic impact of recycling-centric approaches. The study identifies that 69% of economic value already derives from managing existing stocks, suggesting mainstream CE discourse has largely overlooked the most substantial circular practices already embedded in modern economies. The study thus proposes a radical change in the assessment framework that, (a) replaces annual input-based metrics with economic value creation as the primary indicator, (b) incorporates stock utilization efficiency as a core circularity measure and (c) establishes new policy targets focused on value retention and reuse rather than mere material recovery. These findings necessitate a paradigm shift in circular economy strategy -- from counting recycled materials to optimizing economic resilience through intelligent stock management and service-based value creation.