The role of circular economy in EU entrepreneurship: A deep learning experiment

Abstract

Fostering innovation is one of the key roles of the Circular Economy (CE) that applies also to European Union (EU) firms, because entrepreneurs are persistently seeking new ways and means to create values, contributing with significant market opportunities, and depicting large potential for EU sustainable growth. This study explores the effects of firms’ investments in using highly disruptive technologies in the energy sector on the Eurozone (EU-27) in the last two decades (1990–2019). An Artificial Neural Networks (ANNs) experiment through a Deep Learning (DL) approach is implemented to test this hypothesis. The empirical findings show that investments in highly disruptive technologies, especially by large digitally qualified companies, boost economic growth. They are also a crucial driver of digitalization not only because they enhance a wide strategic change implying a radical innovation in business models, but they completely transform markets, from energy to food production, water resources, pollution, connectivity, and plastic waste. These expected benefits represent a possible policy measure to offset the decline in global activity due to the impact of the Russia-Ukraine war on global energy markets. In addition, a positive association between trade and output is confirmed. Finally, promising policy actions are discussed.