Economic complexity tools to analyze circular economy capabilities in global economy

Abstract

To support the transition to circular economy (CE), companies are called to develop and implement CE initiatives through CE strategies. To be effective, CE capabilities are required, defined as appropriate skills, knowledge, abilities, organizational processes, and routines needed to develop CE strategies. This paper investigates two relevant issues concerning the assessment of CE capabilities possessed by country’s companies and the identification suitable CE strategies to be adopted for different economic sectors. We adopt the economic complexity and develop two assessment schemes: the Country Circular Economy Capability Space, assessing the CE capabilities of countries’ companies, and the Circular Economy Capability Proximity Matrix, identifying effective CE strategies to implement by companies in different industries. To build our assessment schemes, we use the multi-regional input‐output tables provided by EXIOBASE3. Based on indices designed, our analyses offer a clear picture of CE capabilities possessed by countries and suggest which CE strategies to adopt for supporting the effective CE transition of economic industries.