How Circular is the Linear Economy? Analysing Circularity, Resource Flows and Their Relation to GDP

Abstract

The concept of Circular Economy (CE) has evolved rapidly over the past decade, yet its macroeconomic interpretation remains constrained by narrow, recycling-centric definitions of circularity which ignores higher-value strategies like maintenance, repair, refurbishment, and remanufacturing enabling prolonged use and reuse of assets. This study critically examines prevailing circularity metrics, particularly the “circular material use rate” often used as a measure of “circularity” and explores how global resource flows and stocks relate to economic value creation, expressed as gross domestic product (GDP). Using a mixed-methods approach that combines global material flow data with macroeconomic analysis, the study shows that while the commonly reported circularity rate is about 9%, correcting for non-recoverable materials reveals a “real” circularity of approximately 27%. However, even this higher circularity corresponds to only about 1.4% of global GDP, highlighting the limited economic impact of recycling-centric approaches. The analysis further demonstrates that nearly two-thirds of GDP is generated through the use and management of existing material stocks and assets, practices that already align with core circular economy principles. The study thus proposes an essential change in the assessment framework that: (a) replaces annual input-based metrics with economic value creation as the primary indicator, (b) integrates stock utilization efficiency as a core circularity measure and (c) recommends new policy targets focused on value retention and reuse rather than mere material recovery. These findings call for an essential shift in circular economy assessment and policy, from counting recycled materials to optimizing economic resilience through intelligent stock management and service-based value creation.