From Protectionism to Informed Consumption: The Territorial Circular Economy Framework for Local Development and Value Retention

Abstract

The renewed prominence of economic protectionism in the global political debate reflects a growing demand for safeguarding employment and local economies. Empirical evidence shows that coercive instruments such as tariffs and trade barriers often generate allocative inefficiencies, regulatory uncertainty, and losses in competitiveness. This article proposes an alternative, the conceptual framework of the Territorial Circular Economy (TCE), a model of economic development based on voluntary protectionism, activated through informed consumer choices in markets characterized by greater transparency. Within the TCE framework, the State acts as an enabling regulator, steering public intervention toward the reduction of information asymmetries and the regulation of commercial communication and advertising, with the aim of increasing consumer awareness of the impacts associated with purchasing locally produced goods and services. In this institutional context, a shift in consumption toward local goods and services becomes a generative economic mechanism, increasing the retention of expenditure and activating a local multiplier effect. Local firms, while benefiting from more stable demand, remain fully exposed to free competition, a condition that incentivizes investments in quality and efficiency. The paper discusses the implications of the TCE and outlines an empirical research agenda aimed at examining the role of demand in place-based development.