Eco-Innovation and Recycling on Raw Material Consumption

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1		Andreea Constantinescu	--	2948	2024-01-25 12:12:14	\|
2	update references and layout	Rita Xu	-3 word(s)	2945	2024-01-26 02:18:35	\| \|
3	update layout	Rita Xu	-4 word(s)	2941	2024-01-29 09:17:42	\|

This entry is adapted from the peer-reviewed paper 10.3390/su15053996

The basic hypothesis is that eco-innovation and recycling have a significant influence on raw material consumption. In the long run, by promoting eco-innovation and recycling, countries will minimize their demand and use of raw materials.

circular material use rate material footprint frugal eco-innovation

1. Introduction

The decoupling of the gross domestic product growth from material consumption is one of the main conditions for achieving a sustainable economic and social development. A significant decrease in the demand for material resources accompanied with the extension of the economic activities and the narrowing of the development gap between the world’s countries could be obtained only if some conditions are fulfilled. One important condition to achieve this is the overall reduction in raw material and energy consumption that, in today’s economic circumstances, is perceived as a mode of progress. There are different ways to achieve this objective: (a) the expansion of innovation in order to help the occurrence and implementation of a new type of technical solution for the reduction in material and energy consumption; (b) the expansion of the recycling processes based on economic reasons.

The literature indicates that material consumption is affected by the following three factors: resource intensity in the production of goods and services, consumption of goods and services per person, and population size ^[1]. The resource intensity in obtaining goods and services can be reduced by several steps, such as enhancing eco-innovation and maximizing the activities that promote a circular economy. These steps could ensure a significant advance toward a new paradigm of the economy. The authors note that recent research ^[2] revealed that the continuous innovation processes designed to promote economic growth and environmental protection favour the transition from the linear economy, which stimulates the increase in material consumption, to the circular economy, defined by decreasing material consumption and the growing importance of recycling activities. In other words, by promoting the changes in the technological and institutional landscape, it is possible to make a transition from the principle “take–make–dispose” of the linear economy to the principle “reduce –reuse–recycle” of the circular economy ^[3] (The principle “reduce–reuse–recycle” of the circular economy was an initial one. The steps which were made for the implementation of circular economy led to the considerable extension of the principle which contributes to the building of the respective type of economy. Recent research ^[4] speaks about 33 Rs principle of circular economy which concerns technical, institutional, and business aspects.).

2. Eco-Innovation and Recycling on Raw Material Consumption

The reduction in raw material consumption is an important direction for promoting sustainable development. This assumption is revealed by the fact that the Sustainable Development Goals adopted in 2015 in the framework of the United Nations include some approaches related to responsible consumption and production. This tendency can be highlighted by indicators such as (a) domestic material consumption (DMC) and (b) material footprint (MF). Recent research ^[1] showed that DMC reveals the apparent material consumption and its use in the analysis of the progress in ensuring the premises of sustainable growth can lead to distorted results. Depending on the foreign trade structure, it is possible to draw some distorted conclusions regarding the decoupling of economic growth from the material consumption dynamics.

The material footprint exposes the real demand for raw material inputs generated by economic and social activities which take place in a country. The respective indicator quantifies the allocation of used raw material extraction to the final demand of an economy ^[1]. Material footprint values depend on the size of the analyzed economies. In order to eliminate the influence of the size of the countries’ economies, the material footprint per capita indicator can be used and comparable data can be generated. For this reason, the material footprint per capita will be used as an indicator of raw material consumption in the European Union member states.

A new research paper ^[5] explored factors that influence the ecological footprint at different income levels. The paper took into account a panel regression model to analyze the factors that affect the ecological footprint. The panel data model was used in order to determine the individual difference between samples, at a regional level. The model that was used was a panel with random effects and several regressors as GDP per capita (log), the urban population as % of the total (residual), exports of goods and services as % of the total GDP (log), and foreign direct investment (log). This model was applied to three income groups of countries (low, medium, and high income). The empirical results obtained confirmed that in all three income groups, GDP/capita sensibly influences the ecological footprint. The consequence of this result means that there will be a lower environmental quality as a result of economic development irrespective of the level of income. However, the model also showed that the effect of GDP/capita on the ecological footprint is not the same for different income levels. For instance, an increase in the GDP/capita in a low-income country will determine a smaller effect on the ecological footprint than the same increase in the GDP/capita in a middle or high-income country.

In the last decades, the concept of eco-innovation was used to define and support the efforts to sustain a reduction in resource intensity in the production of goods and services. As well, the economic practice showed that one of the main outcomes of the innovations (and eco-innovations makes no exception) is diminished material consumption. Eco-innovation processes strongly depend on many factors among which researchers could mention the scientific paradigm and the production organizing methods. In addition, an important contribution to the acceptance of proposals for the changes in the technological linkages in the productive apparatus is given by the economic, social, and cultural environment ^[5]^[6]. The economic literature reveals the existence of several types of innovation. The role of innovation in sustaining economic growth was analyzed by Schumpeter in his works published for the first time in 1911 and 1942 ^[7]^[8]. In the Schumpeterian vision, the innovation processes are linked with the activities of the entrepreneurs in the context of a market economy. During the second half of the XXth century, there were contributions to economic innovation brought by several authors such as ^[9] concerning the role of learning by doing, from a neoclassical vision by ^[10], from an evolutionary vision ^[9]^[10]^[11]. In most cases, the innovation processes are described as multidimensional ones. Another author ^[12] shows that the innovations are classified as incremental, radical, and new technological systems ^[12]. Incremental innovations are usually generated by the implementation of the “learning by doing” or “learning by using” principles. The respective innovations contribute to the cost changes (usually by diminishing) to supply goods and services. In the case of incremental innovations, usually, the first effect is the saving of human or natural resources. Usually, the respective type of innovation is obtained in the context of a short-term vision of economic evolution.

Radical innovations have major contributions to the occurrence of new economic activities or branches, in the context of maintaining the paradigm of the productive apparatus. The above-mentioned classification reveals the impact of the innovation processes on the linkage between economic activities. The radical innovations were most often obtained in the context of structural adjustment of the economy and extended use of new technologies and implicitly had consequences on a long-term vision regarding economic evolution. This type of innovation ensures the sustainability of the innovation processes underlining that, in the long run, incremental innovations cannot be sustained if the innovations are not implemented ^[13].

In the context of the third industrial revolution, one of the forms of innovation is the occurrence of new technological systems, which represents a challenge for the existing paradigms which are dominant, at one moment, in science, technologies, and productive apparatus. The respective form of innovation has a long-term impact not only on the sectoral or branch structure of the economy but also on the methods of the production organization, skills requirements for the employees, demand for fixed capital, and raw materials and waste management. In many cases, the implementation of new technological systems has disruptive effects on traditional activities, caused by the sudden diminishing of the demand, production factor substitution, or the new skills requirements for the potential workers or employees.

The advances towards a new economic structure generated by the large-scale implementation of informational communication technologies have favoured the occurrence of new features of innovations. The theoretical framework concerning the innovations has been sensibly enriched. Considering the factors which have influenced the need for changes in the productive apparatus and the new features of the economic environment, the existing types of innovations were redefined.

Therefore, the study of the innovation processes has focused on the role of market forces and the features of technologies used for the supply of products and services. Various authors ^[14] stated the existence of four types of innovation considering the novelty of technology and markets. Hence, researchers deal with four types of innovations, i.e., (a) incremental innovation, when an existing technology is used to improve a product (service) in an existing market; (b) disruptive innovation, which occurs when firms use new technologies to supply new products in an existent market; the respective products act as a challenge for the traditional products and in the long run tend to replace them; (c) architectural innovation which occurs when firms use existing technology to create new products and in the middle and long run would create new markets; in other words, the firms recreate the architecture of the product to meet and extend the needs of the consumers; (d) radical innovation, when the economic agents use new technologies to supply new products (services) and implicitly open up new markets. It is important to note that, in many cases, innovations occur in the framework of firms as a consequence of the strategic management ^[15].

Nevertheless, the theoretical constructs related to innovation are continuously growing. For example, OECD ^[16] distinguishes other types of innovation concerning the improved (new) products, technological processes, marketing methods, workplace organization, business model, and firm’s external relations. The causes of this evolution are the multiplication of the factors sustaining the innovation processes, on the one hand, and the new constraints which have to be overpassed by firms in order to achieve the development of economic activities, on the other hand.

Among the relatively new types of innovation, the literature has increasingly paid attention to the concepts of eco-innovation and frugal innovation. The above-mentioned types of innovation are mainly generated by new conditions which are manifested in the context of the developed countries’ transitions to a post-industrial society, an extension of industrialization to new developing countries, an increasing degree of globalization, and the large-scale implementation of informational communicational technologies. The respective evolution caused the occurrence of important constraints/restrictions on economic growth and one of the most important restrictions is the depletion of natural resources and environmental degradation. In this context, the concept of eco-innovation was considered both by economic theorists and entrepreneurs in their activities, either long-term or day-to-day activities ^[17].

One of the first definitions of eco-innovation was given by ^[18], who considered it to be a process in the development of goods or services providing customer and business value but in the context of a significant decrease in environmental impact. The respective definition reveals that the main goal of eco-innovation is maintaining or even extending the utility provided by the economic agents to the final consumers, fixed goods producers, or public authorities at the same time with diminishing of the negative externalities, especially the depletion of natural resources and pollution.

In the context of extended preoccupations for ensuring the sustainability of economic growth and its decoupling from material resource consumption, the study of the features of eco-innovations has represented one of the main aspects of economic and technological research. Therefore, the number of definitions of the concept of eco-innovation has really exploded, as ^[19] highlighted, in 2007 the number of definitions was 105. The respective trend has continued in our days.

The impressive number of definitions given to eco-innovation is influenced by the higher complexity of the respective phenomenon, from the point of view of causes and economic, technological, and social impact. During the first two decades of the 21st century, the innovation definitions were correlated with the action programs adopted by the international organizations (EU, OECD, UNIDO) to create favourable conditions for the significant reduction in the use of natural resources and the impact of harmful substances in all the fields of economic activities. Additionally, the definitions have considered a wide range of modelling factors and the correlations between eco-innovation and the features of the business model ^[20].

During the second decade of the 21st century, eco-innovation is seen as one of the main components of the strategies of the European Union dedicated to obtaining a significant increase in resources and energy efficiency and creating a low-carbon society. Therefore, it is possible to create new premises for the survival of the companies ^[21]. In recent years, the definitions of the above-mentioned type of innovation stress their role in the use of clean technologies and eco-products, the extension of material recycling, and transition to a more circular economy ^[22].

Eco-innovation can also be examined in connection with frugal innovation. The concept of frugal innovation has originated in the theories of appropriate technologies, designed to ensure the narrowing of gross domestic product per capita gaps between the developed and developing countries. The first clear definition of frugal innovation occurred in the second part of the first decade of the 21st century. Therefore, Ref. ^[23] defined frugal innovation as the innovation which aims to create new products, services, processes, and even business models which cause a frugal use of materials, low costs of production, and a sparing impact on the environment. In fact, the respective type of innovation is based on the principle “doing more with less”.

Frugal innovation has represented a constant concern of the economists and other specialists implicated in the design and implementation of policies for the acceleration of economic growth in developing countries and the raising of the living standard in the case of persons with low incomes. These preoccupations were largely manifested in India, where many concepts were identified, such as Gandhian innovation or Jugaad innovation. These concepts emphasized the idea that, in the context of low-income levels, the innovation processes have to be focused on the cost reduction and increase in the labour content of the products and services. This way, it is possible to obtain a decrease in prices of the products and services and consequently an enlargement of the market and a significant growth in the number of consumers. In other words, frugal innovation could significantly contribute to the democratization of consumption in the context of decreasing the pressure on the natural resources. Therefore, the increase in the labour content of the products and services would contribute to the growth of the number of jobs.

It is important to mention that frugal innovation is not only suitable for developing countries but desirable. One of the main principles of the respective category of innovation can be found in the technique called “Value analysis”, which was largely used by the firms in developed countries in order to reduce the costs of energy consumption in the context of maintaining the utility of the supplied goods or services. The preoccupations for sustaining frugal innovations in developed countries are continuously increasing. The respective evolution is caused by the multiple valences of the frugal innovations concerning the increase in the firm’s competitiveness in the short run, but also provides for environmental protection ^[24].

The promotion of frugal innovation in developed countries has to consider the particular features of the respective states or provinces, such as environmental concerns, specific needs, and the market structure ^[23]. Therefore, ^[25] speaks about “second-degree frugal innovation” in the above-mentioned states or provinces. The respective variety of frugal innovation is determined by the usability, quality, and price variances between the developed and developing countries/provinces. The extension of frugal innovation is also favoured by the constant research of this type of innovation, both in developed and developing countries ^[26].

Because frugal innovations contribute, in so many cases, to the objectives of ecological innovations, ^[27] introduced the concept of frugal eco-innovation. Therefore, the above-mentioned variant of innovation is defined as the concept of new products, services, processes, and business models, which are orientated to low costs and minimizing the environmental impact of economic activities and also favour re-using and recycling. It is important to note that frugal eco-innovation has both economic and social impact. It can be either incremental or radical innovation. In fact, frugal eco-innovation can offer one or more solutions for the reduction in material costs. At the same time, it also creates conditions for advancing the economic paradigm of circular economy or an increased corporate responsibility and renewal of the management practices. Hence, the definition and implementation of frugal eco-innovation reveal its complexity and their role in obtaining a sustainable economic growth and the significant reduction in the pressure on the natural environment.

Some experts expressed the opinion that frugal products and services should focus mainly on the customers’ core needs and give up unnecessary complexity while adhering to high quality standards. In this logic, they have predicted a trend towards frugal solutions in some developed countries such as Germany or other Protestant Nordic countries that used to appreciate simplicity of “frugal choices” being considered cultural heritages. Another widespread consensus was that frugal innovations are necessary to secure long-term competitiveness of German companies in fast-growing, unsaturated markets in the emerging economies ^[28]. It was realized that an overwhelming reliance on tech-driven products and high complexity may act as a prevailing obstacle in implementing frugality in products that are going to be exported.

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Victor Platon

Florin Marius Pavelescu

Marius Surugiu

Simona Frone

Raluca Mazilescu

Andreea Constantinescu

Florina Popa

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1. Introduction

2. Eco-Innovation and Recycling on Raw Material Consumption

References