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Questions and Answers
What is one of the economic benefits of a circular economy?
What is one of the economic benefits of a circular economy?
How does the circular economy contribute to environmental sustainability?
How does the circular economy contribute to environmental sustainability?
Which of the following is NOT a method to promote a circular economy?
Which of the following is NOT a method to promote a circular economy?
What opportunity does the circular economy present in financial terms?
What opportunity does the circular economy present in financial terms?
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How can businesses benefit from adopting circular economy practices?
How can businesses benefit from adopting circular economy practices?
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Which sector could see significant GDP growth by transitioning to a circular economy in Australia?
Which sector could see significant GDP growth by transitioning to a circular economy in Australia?
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What role does innovation play in the circular economy?
What role does innovation play in the circular economy?
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What is a predicted increase in disposable income for European households by 2030?
What is a predicted increase in disposable income for European households by 2030?
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What is the estimated share of the re-manufacturing industry in aggregate production in the US?
What is the estimated share of the re-manufacturing industry in aggregate production in the US?
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Which of the following is a potential issue raised by the trade in second-hand goods?
Which of the following is a potential issue raised by the trade in second-hand goods?
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What is the estimated net gain of jobs globally due to the transition to a circular economy by 2030?
What is the estimated net gain of jobs globally due to the transition to a circular economy by 2030?
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What was a concern raised by China in 2013 regarding imports?
What was a concern raised by China in 2013 regarding imports?
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What is the potential reduction in artificial fertilizer use in European food systems as a result of a circular economy?
What is the potential reduction in artificial fertilizer use in European food systems as a result of a circular economy?
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What is one of the adverse effects of importing second-hand vehicles?
What is one of the adverse effects of importing second-hand vehicles?
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By how much could material costs potentially decrease in the automotive sector due to circular economy practices?
By how much could material costs potentially decrease in the automotive sector due to circular economy practices?
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Which income group has typically experienced larger losses in income share since the 1980s in the US?
Which income group has typically experienced larger losses in income share since the 1980s in the US?
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What percentage of savings in material costs is expected from circularity in manufacturing?
What percentage of savings in material costs is expected from circularity in manufacturing?
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How has income inequality across countries changed since 1980?
How has income inequality across countries changed since 1980?
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What is one expected outcome of circular practices in the construction sector?
What is one expected outcome of circular practices in the construction sector?
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What was a trade barrier issue recorded by the WTO in 2013?
What was a trade barrier issue recorded by the WTO in 2013?
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What trend has been observed in global exports of second-hand textiles from 1988 to 2018?
What trend has been observed in global exports of second-hand textiles from 1988 to 2018?
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What significant change has occurred in the income share of the top 1% in the US since 1980?
What significant change has occurred in the income share of the top 1% in the US since 1980?
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Which of the following statements is true regarding the export of second-hand cars between 2000 and 2018?
Which of the following statements is true regarding the export of second-hand cars between 2000 and 2018?
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In 2018, what was the average per unit value of a second-hand vehicle exported outside the EU?
In 2018, what was the average per unit value of a second-hand vehicle exported outside the EU?
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What trend has occurred in the gap between average incomes of the top 10% and the bottom 50% over the past two decades?
What trend has occurred in the gap between average incomes of the top 10% and the bottom 50% over the past two decades?
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Which country has experienced a sharper increase in income inequality compared to most European countries?
Which country has experienced a sharper increase in income inequality compared to most European countries?
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What major global event caused the steepest rise in global inequality since World War II?
What major global event caused the steepest rise in global inequality since World War II?
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Which factor is identified as a fundamental driver of income inequality according to 'Capital in the twenty-first century'?
Which factor is identified as a fundamental driver of income inequality according to 'Capital in the twenty-first century'?
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Who are identified as the winners of globalization according to 'Global Inequality: A New Approach for the Age of Globalization'?
Who are identified as the winners of globalization according to 'Global Inequality: A New Approach for the Age of Globalization'?
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What has contributed significantly to widening the income gap in both advanced economies and developing countries?
What has contributed significantly to widening the income gap in both advanced economies and developing countries?
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What is indicated as necessary to achieve more equal distribution of market incomes?
What is indicated as necessary to achieve more equal distribution of market incomes?
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What is the focus of the report titled 'Re-defining Value–The Manufacturing Revolution'?
What is the focus of the report titled 'Re-defining Value–The Manufacturing Revolution'?
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What effect has rising inflation had, especially in low- and middle-income countries since 2021?
What effect has rising inflation had, especially in low- and middle-income countries since 2021?
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Which publication discusses 'A circular economy vision for a competitive Europe'?
Which publication discusses 'A circular economy vision for a competitive Europe'?
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What is a key theme presented in the 'Automotive Revolution & Perspective Towards 2030'?
What is a key theme presented in the 'Automotive Revolution & Perspective Towards 2030'?
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What is the main theme addressed by the International Resource Panel in their report from 2018?
What is the main theme addressed by the International Resource Panel in their report from 2018?
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Which of the following authors is associated with 'Capital in the Twenty-First Century'?
Which of the following authors is associated with 'Capital in the Twenty-First Century'?
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Study Notes
Circular Economy
- Promotes resource conservation and biodiversity
- Reduces CO2 emissions and promotes a greener environment
- Creates new market niches and job opportunities
- Stimulates innovation in various sectors, including recycling, manufacturing, and design
- Generates welfare gains for consumers due to reduced costs
- Promotes a sustainable economic model by decoupling growth from resource consumption
Impact of CE
- The circular economy offers a $4.5 trillion economic opportunity by reducing waste, stimulating innovation, and creating employment
- The disposable income of European households can increase by approximately €3,000 by 2030
- Transitioning to a circular economy could lead to $210 billion in present value GDP in Australia by 2047-48
- The transition to a circular economy could lead to a net gain of approximately 6 million jobs globally by 2030
Sector-Specific Impacts
- In agriculture, a circular economy for food systems in Europe could lead to an 80% reduction in artificial fertilizer use
- In the automotive sector, a circular economy could reduce material costs by 20-30% and drive significant innovation in vehicle design
- Circularity in manufacturing could lead to 30-50% savings in material costs
- Circular practices in the construction sector could reduce costs by 10-15%
CE and International Trade
- The increasing importance of the circular economy raises the prospect of countries achieving “within growth” rather than through international exchange
- The circular economy promotes an increase in trade in secondary raw materials while reducing trade in raw materials.
International Trade in CE: Some Evidence
- Global exports of second-hand textiles increased 12% in weight and 26% in value between 1988 and 2018
- OECD countries are major exporters of second-hand textiles, representing 77% of total export value in 2018
- Between 2000 and 2018, the value of second-hand car exports increased by 79%
- The average per-unit value of a second-hand vehicle exported outside the EU was €4,165, whereas within the EU, it was €11,038.
- The share of the re-manufacturing industry in aggregate production remains low, not exceeding 2% in the US and 1.9% in the EU.
Trade-offs from International Trade in CE
- Trade in second-hand goods can create a lock-in of importing economies into old and inefficient technologies.
- Importing second-hand vehicles with high emissions can have adverse environmental effects.
- Trade in second-hand goods can create a potential loophole for illegal trade in hazardous or contaminated waste.
- Second-hand goods can also raise potential issues in trade agreements regarding the right to repair and intellectual property rights.
Trade Restrictions and CE
- The promotion of the circular economy raises concerns about new trade barriers.
- The WTO has recorded disputes between the EU and Japan regarding tariffs imposed by Russia to support domestic automobile manufacturing.
- China's implementation of the “Green Fence” in 2013 raised concerns about the quality of imported raw materials.
- Countries such as Brazil and India have restricted the movement of non-new products, raising concerns about trade restrictions and the circular economy.
Global Inequalities - Some Stylized Facts
- Since the 1980s, within-country income inequality has generally increased in many countries.
- Since 1980, across countries inequality has decreased significantly, largely due to economic growth in emerging economies like China and India
- The income share of the top 1% and 0.1% has increased significantly, especially in the US.
- The top 1% income share in the US rose from about 10% in 1980 to over 20% in recent years.
- Low- and middle-income groups have suffered a loss of income share, with the bottom 50% typically experiencing larger losses.
- The gap between the average incomes of the top 10% and bottom 50% within countries has almost doubled from 8.5 to 15 over the past two decades.
- Inequality has risen more sharply in the US compared to most European countries.
- France and Germany have seen more modest increases in inequality.
Global Inequalities: Recent Trends
- The 2008 financial crisis temporarily reduced top income shares, but they have since rebounded in many countries.
- The COVID-19 pandemic caused the steepest rise in global inequality since World War II between 2019-2020.
- The pandemic has caused the largest rise in between-country inequality in three decades.
- Rising inflation, especially in low- and middle-income countries, has further exacerbated inequalities since 2021.
Causes of Income Inequality
- The fundamental driver of rising inequality is r>g (return on capital exceeding economic growth rate)
- Technological progress and the resulting rise in skill premiums have contributed significantly to widening the income gap.
- Globalization has also played a role in reinforcing increasing inequalities.
- The decline of labor market institutions is another driver of inequality.
Globalization and the Evolution of Income Inequality
- The book “Global Inequality: A New Approach for the Age of Globalization” identifies the winners and losers of globalization.
- Winners have been the middle classes in emerging economies (especially Asia) and the global super-rich.
- Losers have been the middle classes in developed countries.
- The book concludes that while between-country inequality decreases, within-country inequality may become more dominant.
- The authors advocate for “pre-distribution” to make market incomes more equal, through more equal distribution of capital ownership and education
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Description
Explore the principles and impacts of the circular economy, highlighting its benefits for resource conservation, job creation, and economic growth. This quiz delves into the opportunities presented by a circular economy and its contributions to a sustainable future.
