CIRCULAR ECONOMY AND RESOURCE PRODUCTIVITY IN DRIVING GREEN GROWTH: EVIDENCE FROM INDONESIAN PROVINCES

Abstract

This study aims to analyze the influence of the circular economy and resource productivity on green economic growth at the provincial level in Indonesia. The approach used is quantitative with an explanatory design through panel data regression analysis of 34 provinces during the period 2019–2025. The empirical model is estimated using Fixed Effect Model (FEM) based on the results of the model selection test. Circular economy variables proxied by the percentage of managed waste, resource productivity is measured by the ratio of GRDP to energy consumption, and green economic growth is calculated from the interaction of GRDP per capita and the Environmental Quality Index. The results show that simultaneously, the circular economy and resource productivity have a significant effect on green economic growth. Partially, the circular economy has a negative and significant effect, while resource productivity has a positive but insignificant effect. These findings indicate that the implementation of the circular economy in Indonesia is still in the early stages of transition and therefore has not yet provided an optimal impact on green economic growth. This study contributes to the development of environmental economics literature by integrating both variables in a single empirical model based on panel data and provides policy implications related to the importance of strengthening waste management systems and resource efficiency in promoting sustainable development at the regional level.