Circular economy strategies for sustainable economic stability: Evidence from MENA economies

This study investigates the macroeconomic determinants of circular economy investment across countries in the MENA (Middle East and North Africa) region, which faces challenges in sustainable growth and economic diversification. Specifically, the study examines how GDP per capita, government expenditure, unemployment, inflation, and interest rates are associated with the Circular Economy Investment Index (INV), which represents the intensity of circular economy-related activities. Using a balanced panel dataset covering nine MENA countries over the period 2010–2024, the study applies a Panel Error Correction Model (ECM) combined with machine learning approaches to analyze short-term dynamics, long-run relationships, and predictive patterns. The results indicate that higher GDP per capita and government expenditure are positively associated with circular economy investment, whereas higher interest rates and unemployment are negatively associated with INV. Inflation shows a context-dependent relationship with circular economy investment. The machine learning analysis provides additional evidence regarding the predictive capacity of macroeconomic variables but is not interpreted as causal evidence. Overall, the findings identify the macroeconomic conditions associated with circular economy investment in MENA economies and provide policy implications for designing sustainability-oriented strategies that may contribute to long-term economic transformation and resilience-oriented development.