Transition to a Circular Economy: A Necessity or a Stage in Economic Development

Introduction

The current stage of economic development, particularly in developing countries, is characterized by significant economic shifts. The observed changes in the content of the economic systems used affect the problems, first of all, of the optimal use of resources, as well as the transformation and significant reduction in the use of both resources and production waste. The strategy for such a transformation of production is associated with the use of models for the processing of necessary resources, materials and their reuse, as well as the production of new goods, works and services. The essence of such transformations of a linear economic system lies not only in the reuse of production waste but also in the creation of goods with new consumer value. The ultimate goal of such transformations of economic development systems should be to achieve minimal waste production through the development of innovative technologies based on a broad and specialized environmental assessment and economic evaluation.

The above-mentioned issues are expected to be addressed as part of the creation of conditions and the transition to a circular economy. As is well known, the transition to a circular economy model makes it possible to use not only primary but also secondary resources at different stages of the production cycle, depending on the production technology used. This not only creates a stable demand for secondary raw materials but also a different price ratio between primary and secondary resources in the production resource market. The search for innovative waste management solutions, as well as the development and implementation of principles and approaches for waste-minimized or waste-free production, must be based on the understanding that, despite active and comprehensive natural processes, the natural environment is virtually free of waste. In this regard, questions arise: what needs to be done and in what direction should the search for necessary solutions be conducted?

Materials and Methodology

Since closed-loop supply chains form the foundation of the circular economy, they can combine conventional forward supply chain processes with reverse logistics processes, which include product recovery, structural separation, and reuse of individual parts of materials or territories. In this regard, based on the results of research and assessment of the state of waste use, it is necessary to develop a classification of waste and its standardization according to the degree of accessibility and use in further production.

The presented data on waste (see Table 1) show that only a small part of the waste generated at the enterprise and not used or disposed of by the enterprise itself is processed, stored or disposed of by other enterprises that have the capacity and technology to reuse it. The share of recycled or recycled waste is less than one percent of the production and consumption waste generated during the period in question [4, 2024]. Unfortunately, the majority of production waste remains unrecycled and is not reused as materials for the production of other goods. This trend is, in general, quite understandable, since the predominant waste in our country during the survey period consisted of mining waste, which cannot be recycled or disposed of, but can only be reclaimed or restored, since we are talking mainly about areas where various resource deposits are being developed.

It should be noted that in many countries around the world, rock waste is not considered "typical" waste, which may be generated not through production or consumption, but through the development of mineral deposits that have a negative impact on the environment by changing the state of mining areas.

The introduction of a circular economy system into a country's economic development strategy can have a significant impact on various areas of its implementation and at different stages of production. Research should focus on understanding industrial waste as a specific type of resource that can and should be used to address economic and environmental safety issues within the framework of a circular economy. It is crucial to study the structure of such a system, identifying not only its key elements but, crucially, the mechanisms by which these elements interrelate. Research into the mechanisms of system operation is essential and closely related to waste standardization, which involves preparing waste for subsequent use in the production of various goods and materials. In our country, waste is grouped into 4 categories according to the degree of its further transformation or use: for use (from 0.01 to 0.1%), for deactivation (less than 0.001%), for disposal (or liquidation (from 0.3 to 30%) and for storage (less than 0.1%) (see Table 1).

The integration of a circular economy system into the country's economic development strategy can have a significant impact on various areas of implementation and at various stages of production. For example, the transition to a circular model in the highly fragmented light industry of the Kyrgyz Republic is impossible without the creation of adequate digital infrastructure and supporting institutions. We have developed a "Diptychs" system for the Kyrgyz Republic's light industry sector as a key technological tool for resource tracking. Its content is based on the following measures. First and foremost, to overcome the barrier of disunity among small businesses, we propose the creation of a public-private institution—the National Operator of Secondary Textile Resources—to coordinate production waste flows, certify recycled fiber, and administer a system of environmental preferences. These actions are envisaged through the creation of "industrial symbiosis" zones, where small businesses receive tax deductions proportional to the volume of waste transferred for legal recycling. The digital system we propose, "Diptychs," is based on the principle of two-sidedness (binary accounting), where each material flow in the light industry is considered in the inseparable unity of "product - waste." The "Diptychs" system includes two integrated modules: Module A (resource passport), which records the input parameters of raw materials (fiber type, chemical composition of dyes). Essentially, this model is a "digital shadow" of a fabric roll, which accompanies it during the cutting stage and module B (cyclic tracking), which automatically generates data on the volume and morphology of the resulting drops based on pattern layout algorithms. Overall, this model enables the aforementioned data to be compared with the needs of processing plants in real time. Using the “Diptychs” system ensures the reliability of labeling data, when fabric rolls are marked with unique QR codes at the import or production stage, synchronization, when the program transfers the estimated waste volume to the “Diptychs” system during digital layout creation, and smart contract implementation, when the system automatically finds the nearest processor requiring a given fiber type and generates a logistics request, ensuring "transparency" in the movement of waste. Ultimately, based on the data used and analysis using the “Diptych” system, the implementation of the national standard "Circular KG" is proposed. Such solutions could allow companies that have demonstrated a high recycling rate through the digital platform to gain priority access to government procurement and international export corridors. The use of the “Diptych” system will transform information chaos into a structured database of secondary resources. This will overcome a key barrier—the lack of trust and data between market participants. Institutionalization of this system within the Kyrgyz Republic's legal framework will create a digital foundation for industrial symbiosis, transforming the light industry into a closed, high-tech ecosystem.

Thus, there is a need to focus research on understanding industrial waste as a specific type of resource that can and should be used to address economic and environmental security issues within the framework of a circular economy. It is crucial to study the structure of such a system, identifying not only its key elements but, crucially, the mechanisms by which these elements interrelate. Research into the mechanisms of system operation is essential and closely related to waste standardization, which involves preparing waste for subsequent use in the production of various goods and materials. In our country, waste is grouped into four categories based on its degree of further transformation or use: for use (from 0.01 to 0.1%), for deactivation (less than 0.001%), for disposal (or liquidation) (from 0.3 to 30%), and for storage (less than 0.1%) (see Table 1).

This waste management picture continues to demonstrate the absence of a waste reuse policy, with most of it simply being destroyed at the expense of energy and effort. There is no regulatory framework supporting a waste collection system, nor is there a designated government agency responsible for implementing extended responsibility principles. Furthermore, businesses currently lack incentives to collect and sort waste. Likewise, liability for failure to properly implement environmental protection laws does not apply. The lack of appropriate technologies for converting waste into secondary resources or reusable materials may also indicate the need for research and action in this area as part of the transition to a circular economy model.

The important elements of the circular economy, on which its structure is based, include, first of all, various types of resources, according to the degree of their use, production cycles and resource conversion technologies. This system of economic production is based on the theory of reproduction, which ensures a transition from a linear (traditional) production model to a regenerative model [5, 1994], the essence of which is the creation (extension) of product value chains through the reuse, repair, restoration, and recycling of production resources.

Waste, the value of which was previously considered zero, can be accounted for within the production process at the cost of replacing primary resources, and at the level of a closed-loop system - at the cost of lost opportunities due to underproduction [2, 2018]. In the long term, it becomes profitable for companies to use secondary raw materials, either by purchasing them from third-party companies or by investing additionally in waste recycling technologies. Therefore, the creation of a circular economy or closed-loop economy system requires the use of the following principles, which can be and should be considered when transforming the existing economic system to utilize a circular economy model:

1. Preserving and increasing natural capital by managing primary and renewable resources and production waste.

2. Optimizing resource use by circulating products, components, and materials, taking into account their usefulness at all stages of the technical and production cycles.

3. Promoting the development of a closed-loop economy by identifying both external factors and internal system changes and subsequently redesigning production activities [1, 2015].

The use of production waste, as specific types of resources involved in production cycles due to technological capabilities, should be considered from the standpoint of giving priority to the creation of closed systems in which products and materials are constantly in circulation, within the framework of natural and production cycles, which will make it possible to distinguish and take into account the real causes of economic growth, and not only due to the wider use of primary resources. This strategy for transitioning to a circular economy requires classifying waste based on standards for the value of reuse of waste and manufactured products. Thus, the transformation of production towards a circular economy should involve the development of standards for preserving the value of products consumed and used by consumers, with waste classification and the possibility of reducing the impact on the environment and on the entire supply chain in production cycles [3, 2017].

Results and Discussions

More than one million tons of post-consumer waste are generated annually in the Kyrgyz Republic. Waste of various origins is divided into the following groups: a) household waste, which accounts for 46% of the total waste volume; b) street waste, including waste from unauthorized landfills and park waste, amounting to 15.3%; c) waste similar to household waste from enterprises and institutions – 19.8% [Table 2].

The geographical distribution of waste is determined by the location of waste generation, which is divided into urban and rural areas. The largest share of waste is generated in the cities of Bishkek (34.2%) and Osh (30.5%) [4, 2024, p. 207]. Unlike urban waste, the majority of which (49%) is organic waste, in rural areas the morphological composition of waste disposed of in landfills also includes agricultural waste, the content of which is presented as follows: the majority of waste, 28%, consists of recycled items, including waste paper (10%), glass (8%), metal products (1%), plastic (8%), and textiles (1%), as well as unauthorized remains of dead animals.

The waste structure, or composition of produced and used materials converted to waste, located in landfills or dumps of large populated areas of Kyrgyzstan is represented by the following: plastic materials - 21%, glass - 10%, food waste - 20%, organic waste - 12%, paper and cardboard - 1%, metal products and textiles (0.5% each). Medical waste and biological waste, including electronic, electrical products, and other waste, account for 10%. Finally, landfills also accumulate construction waste, accounting for 14%, and ash of various origins, amounting to 11% [ibid].

Waste recycling and land reclamation are both environmental and economically significant. The waste described above, with a small number of types, is quite suitable for recycling and reuse. This primarily includes paper, glass, metal, plastic, textiles, and other household waste. Incidentally, more than half of households currently dispose of waste using containers (47%) or throw it into garbage piles (20%). In addition to this, unfortunately, a significant proportion of households, mainly in rural areas, burn garbage (24% of the total number of households in Kyrgyzstan) or bury it (9%), which indicates the lack of widespread practice of sorting collected garbage and the use of waste recycling technologies (ibid., p. 209). Therefore, the use of waste as secondary resources requires decisions in the following areas. First, it is necessary to develop waste classification and its redistribution for recycling using recycling technologies. Second, it is necessary to develop waste standards for their possible use, depending on their availability and the time required to "recover" them as secondary resources. Such actions to process waste and prepare new materials for use in production are due to the fact that, unfortunately, more than half of the waste remains unrecycled for various reasons (see Table 1). This represents significant potential, which should be considered not only as secondary resources, but also in the preparation or standardization of waste for use in the production of various goods or materials.

As is well known, the gradual transition to a circular economy facilitates the transformation of the basic principle of the linear model, which can gradually evolve into a principle of reuse. This paradigm of transformation simultaneously increases the environmental efficiency of production and reduces the use of significant volumes of primary resources and, at the same time, products (secondary resources) in the form of waste.

When analyzing the modern concept of a circular economy, it is necessary to consider the interaction between the social, technological (environmental), and production (economic) aspects of implementing a circular economy. Implementing measures to transition to a circular economy should ultimately lead to the wider use of waste transformed into secondary resources and the development of a waste market. Such solutions can and should change our understanding of the production of new value-added goods, the creation of which can be based on the use of recycled waste.

Justifying the feasibility of transitioning to a circular economy in the Kyrgyz Republic's light industry requires the development of an integrated assessment methodology that takes into account not only direct commercial revenue but also a range of externalities. As part of our research, we proposed a methodology for complex multiplicative analysis based on three vectors of efficiency: economic, environmental and social. The economic effect and the resource-saving effect assume a direct economic effect at the micro level (enterprise level) and are calculated through the coefficient of reduction of material intensity and income from the sale of the required materials. However, at the macro level (industry level), a circularity multiplier arises. The environmental performance assessment in our studies was based on the prevented environmental damage method, which reduces the carbon footprint by eliminating the incineration of textile waste in private sector furnaces, conserves land resources by preventing the use of land for new landfills (reducing the volume of textile landfills by 70-80%), and reduces water consumption during production by using recycled cotton.

Unlike the economic and environmental impacts, the social impact of the industry's circular transformation will trigger qualitative changes in Kyrgyzstan's labor market. This will enable the creation of new jobs, the number of which, according to forecast calculations, could amount to 5,000 - 7,000 new jobs in the collection, sorting and high-tech recycling segments. These changes, driven by the effective implementation of our findings, could also impact public health, resulting from a direct correlation between reduced textile incineration and a reduction in respiratory illnesses in the Bishkek metropolitan area.

Conclusion

It is known that waste is increasingly viewed as a valuable secondary resource, serving as a repository of precious metals, organic matter and plastics. The implementation of a circular economy model, through the use of specific technologies, makes it possible to reuse materials that would otherwise be disposed of as waste or destroyed into raw materials for new products. This presents a new opportunity to conserve primary resources while reducing carbon dioxide emissions from inefficient production and waste. In this regard, there is a need to create waste processing plants, and not just the construction of waste incineration plants. The term "incineration" is essentially synonymous with destruction. However, industrial and household waste contains a significant number of materials that are not only cheaper to reuse but also reusable. The use of new technologies for recycling waste to produce new goods and materials can also create products with lower production costs, but which are highly necessary for widespread use, for example, paper, textiles, plastics, etc.

Thus, the transition to a circular economy is both a necessity and a new stage in economic development, based on a system of recycling and reusing waste to produce goods and materials at lower cost while significantly reducing emissions and environmental pollution.