LOCALLY EMBEDDED CIRCULAR ECONOMY SYSTEMS (LECES) AS A CATALYST FOR LOCAL ECONOMIC REVITALIZATION, GREEN JOB CREATION, AND REGIONAL GDP GROWTH

Abstract

This study examines the impact of Locally Embedded Circular Economy Systems (LECES) on green job creation and regional GDP growth in West Nusa Tenggara (NTB) Province, Indonesia. LECES represents an integrated framework of circular economy practices waste recycling, renewable local raw materials, and product take-back systems implemented at the micro, small, and medium enterprise (MSME) level. Using a quantitative approach combining system dynamics modeling and time-series analysis (linear, quadratic, exponential-growth, and S-curve models), data were collected from 185 MSMEs across four industry sectors (food/beverage, handicrafts, fashion, and agriculture) through stratified random sampling. The system dynamics model captures feedback loops between circular material flows, employment multipliers, and regional income aggregates. Sensitivity analysis reveals that a 10% increase in circular material utilization rates leads to a 4.2% increase in green employment and a 2.8% increase in regional GDP contribution from MSME sectors. Time-series projections indicate that LECES-adopting MSMEs are forecast to generate approximately 12,400 additional green jobs and contribute an estimated IDR 3.2 trillion to regional GDP by 2030, representing growth rates of 18.6% and 22.3%, respectively, relative to the 2023 baseline. The best-fit time-series models identified are the linear model for aggregate green job projections, the S-curve model for material circularity rates, exponential growth for sectoral output value, and the quadratic model for LECES adoption diffusion. These findings provide evidence-based policy recommendations for NTB's regional government to accelerate LECES adoption as a driver of sustainable economic revitalization.