The relationship between economic growth and waste generation is a major global concern. Previous studies provided no conclusive evidence as to the causality between these two concepts, which can be attributed to at least two problems. First, R&D intensity is increasingly recognized as being an important determinant of environmental quality. Second, the regional level is considered to be important for the implementation of waste management policies, as regions and municipalities, among others, are responsible for separate collection systems and for establishing and managing treatment facilities. Previous studies failed to reflect the heterogeneity of the regions, which may lead to biased results. To address these problems, the panel vector error correction model was employed to examine the Granger causality in EU regions. The results provide empirical support for the existence of short- and long-run bidirectional causality between waste generation and economic growth in EU regions. A bidirectional link among waste generation, heating energy, and R&D intensity was also observed. The policy implication is that traditional economic development policies are not enough to reduce waste generation in EU regions. Economic tools, such as charges and incentives, and eco-innovation policies should be introduced to promote the region's shift towards a circular economy model.
Keywords: Causality; Economy; European Union; Heating energy; R&D; Waste generation.
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