In perspective: Rejuvenating local economies through locally embedded circular economy systems

Abstract

This paper reorients the focus of circular economy (CE) transitions by introducing the concept of locally embedded circular economy systems (LECES). Rather than treating local economies as passive recipients of global CE strategies, the paper positions them as active arenas for reconfiguring industrial logics, institutional arrangements, and resource flows. It argues that a shift toward LECES is essential for fostering inclusive, resilient, and context-sensitive pathways to circularity. The paper develops a framework to explore how circularity can serve as a catalyst for local economic revitalisation. It highlights the significance of place-based capabilities, traditional practices, local innovation systems, and inter-firm collaboration in shaping circular trajectories grounded in local specificities. The analysis identifies three interrelated pillars for embedding CE within local economies. First, Institutional anchoring refers to how local governance structures and civic engagement shape norms, policies, and regulatory frameworks. Second, Industrial integration highlights how firms collaborate to establish closed-loop systems within and across sectors. Third, Cultural and material embeddedness underscores how local traditions, identities, and resource regimes inform circular practices.

Introduction

The circular economy (CE) has emerged as a central framework in the search for sustainable alternatives to the linear ‘take-make-dispose’ model of production and consumption. Promoted by national governments, international organisations such as the European Union, and advocacy platforms like the Ellen MacArthur Foundation, CE promises to reduce waste, increase resource efficiency, and stimulate regenerative economic activity (Korhonen et al., 2018). The concept has also gained attention in the private sector, where firms are adopting circular business models (Bocken and Ritala, 2022), reverse logistics (Malik et al., 2023), and closed-loop supply chains (MahmoumGonbadi et al., 2021) as part of broader sustainability strategies. As a result, a growing body of literature has emerged that focuses on scalable technologies, business models, and value chains designed to be replicated across industries, regions and countries.

However, despite this global orientation, the implementation of CE initiatives remains deeply embedded in local contexts. The social sciences have long acknowledged the local as a critical nexus for economic transformation and development processes. For example, in economic geography and regional innovation studies, the local is not discussed as a passive geographic container, but an active arena where knowledge is produced, circulated, and embedded in social and institutional relations (Bathelt and Cohendet, 2014). Concepts such as innovation systems and industrial clusters, developed in the 1990s in the face of globalisation underscored how local capabilities, trust-based networks, and institutional ‘thickness’ foster learning, collaboration, and competitive advantage (Porter, 1994). The relational turn further highlights that proximity whether cognitive, institutional, or organisational facilitates innovation and collective action (Davids and Frenken, 2018).

These insights are especially relevant for CE transitions, which are not only about material flows or technical substitution, but about reorganising production, consumption, and socio-technical systems in contextually specific ways. Circular strategies such as recycling, remanufacturing, repair, and refurbish are heavily conditioned by local infrastructure, regulatory regimes, social norms, and patterns of inter-firm collaboration (Ghinoi et al., 2020). In this sense, CE implementation is not spatially neutral; it depends on the spatial distribution of capabilities, institutional arrangements, and the cultural meanings attached to material use and waste. Ignoring these dynamics risks reproducing the very linear approaches that CE was meant to replace.

Nevertheless, mainstream CE discourse tends to downplay these socio-spatial realities. Policy documents and academic contributions often focus on scalable technological solutions and standardised policy frameworks, abstracted from the economic, cultural, and institutional specificities of place. As a result, CE is increasingly portrayed as a depoliticised and technocratic project, one that overlooks the situated practices, informal economies, and historically rooted capabilities that shape how circularity is enacted, negotiated, or resisted on the ground (Genovese and Pansera, 2021).

Transition studies, evolutionary economic geography, and regional development research have consistently shown that sustainability transitions are place-based processes (Murphy, 2015; Truffer et al., 2015). Transformative change such as the CE unfolds through heterogeneous pathways shaped by local institutions, industrial legacies, political arrangements, and power relations (Hansen and Coenen, 2015). Local economies are not simply sites for implementing top-down strategies; they are important arenas where circular initiatives are adapted to, or constrained by, local histories, capacities, and imaginaries. In this context, a localised perspective is not merely a question of scale, it is a conceptual and analytical necessity for understanding the nature of circular transformations.

This In perspective engages with this debate by introducing the concept of Locally Embedded Circular Economy Systems (LECES). It argues that local economies are not just implementation arenas for circular models developed elsewhere. They are generative sites where circularity is co-produced through the interactions of firms, public institutions, civil society, and material infrastructures. Rather than treating the local as an obstacle to scalability, I propose that it be recognised as a source of situated innovation, experimentation, and socio-technical renewal.

To develop this argument, this paper identi three interrelated aspects that underpin the localisation of CE: (1) institutional anchoring, referring to how governance capacities, civic engagement, and regulatory coordination shape the legitimacy and persistence of CE practices; (2) industrial integration, focusing on how circular strategies are embedded in territorial production systems and shaped by tensions between local embeddedness and global value chain dynamics; and (3) cultural and material embeddedness, which emphasises the role of traditions, identities, and local geographies in shaping the desirability and feasibility of circular initiatives.

These pillars are not merely enabling conditions. They constitute the socio-political terrain on which circular initiatives are imagined, contested, and materialised. By developing the LECES framework, this paper offers a place-sensitive lens to understand how CE transitions unfold and how they might lead to more equitable, resilient, and grounded pathways of socio-ecological transformation.

The paper proceeds as follows: in the subsequent section, it briefly discusses relevant literature on the CE, local development, and sustainability transitions. It then outlines the conceptual framework before turning to an in-depth examination of the three pillars of locally embedded CE systems (LECES). The paper concludes by drawing out the theoretical, policy, and practical implications.

Circular economy, local development, and sustainability transitions

In recent years, we have witnessed a growing convergence between the circular economy (CE) discourse and broader agendas for sustainability transitions and regional development (Arsova et al., 2022). With the CE gaining prominence as a guiding framework in both policy-making and industrial innovation, growing attention is being paid to its spatial dimensions, particularly how circular initiatives are embedded in local contexts, anchored institutionally, and capable of enabling transformative socio-technical change at the regional level (Niang et al., 2024). This section discusses the evolution of CE thinking from technocentric origins to more systemic and territorial approaches, and explores its intersections with the fields of local development and sustainability transitions. In doing so, it identifies some blind spots and argues for a more grounded, spatially sensitive account of circular transformations.

From technocentric visions to systemic aspirations

In general terms, the CE approach seeks to minimise material throughput and environmental impact by closing resource loops through practices such as reuse, recycling, eco-design, and remanufacturing (Korhonen et al., 2018). It is increasingly promoted as a model capable of reconciling economic growth with ecological sustainability, an idea institutionalised in initiatives such as the European Union’s Circular Economy Action Plan and China’s Circular Economy Promotion Law (European Commission, 2015; Yuan and Bi, 2006).

The conceptual foundations of the CE are grounded in long-standing debates about the finite nature of non-renewable resources and the need to reconcile ecological limits with prevailing economic models (See, e.g. Boulding, 1966). The current CE debate was shaped by ecological modernisation and industrial ecology, with strong emphasis on material flow analysis, life cycle thinking, and efficiency optimisation (Ghisellini et al., 2016). As the concept matured, the scholarship has begun to address the broader socio-economic and institutional dimensions of circularity, including the role of policy design, business models, and consumer behaviour (Castro-Lopez et al., 2023). However, even as CE discourse has widened its conceptual scope, it often retains a techno-economic imaginary prioritising scalability, standardisation, and supposedly universal design principles (Friant et al., 2020).

Critical perspectives have challenged this dominant framing, arguing that CE cannot be meaningfully advanced without addressing its socio-political and spatial dimensions (Henrysson and Nuur, 2021; Hobson and Lynch, 2016). A growing body of scholarship emphasises that CE transitions are not context-neutral or purely technical endeavours, but rather socially embedded and contested processes shaped by local power dynamics, institutional legacies, and conflicting values (Valenzuela and Böhm, 2017). From this perspective, CE must be understood as a socio-technical and territorial transformation, rather than a purely technical fix (Hobson and Lynch, 2016).

Circular economy and local development: Missing links and emerging synergies

Despite CE’s growing presence in industrial and regional policies, its relationship with local development remains under-theorised and unevenly explored. Most empirical studies focus on urban contexts, particularly in ‘circular cities’, where CE principles are applied to sectors such as waste management, mobility, and energy systems (Paiho et al., 2020; Williams, 2019) even though the validity of some of the proposed frameworks are contested (Papageorgiou et al., 2021). These contributions highlight how urban infrastructures and governance capacities enable circular strategies but often abstract from the diverse territorial conditions and institutional configurations that exist beyond metropolitan centres.

For instance, peripheral, rural, and post-industrial regions, that is, regions that have undergone successive industrial restructuring, remain marginal in CE research, even though they often face specific challenges such as weak infrastructure, fragmented governance, and mono-industrial structures that both constrain and shape opportunities for circular transformation. While the CE could be a vehicle for regional revitalisation, resilience, and job creation (Bourdin and Torre, 2025; Niang et al., 2024), the concrete mechanisms by which circular strategies contribute to place-based development trajectories are rarely scrutinised and the research on this has just started (Asamoah et al., 2025).

This oversight echoes broader earlier critiques in regional studies, where scholars have emphasised the importance of context, institutional embeddedness, and historical legacies in shaping regional economic development (Martin and Sunley, 2006; Rodríguez-Pose, 2020). What is needed are new concepts such as the ‘territorial circular economy’ and ‘place-based circular transitions’ (De Angelis et al., 2025) which should address this gap by positioning CE within local innovation systems, civic networks, and regional value chains. Such approaches should underline that circular transitions are not implemented in space, but are co-produced through space, by actors navigating socio-material constraints, institutional thickness, and regionally specific imaginaries.

These perspectives should be underpinned by important analytical questions: How do different territorial actors such as municipalities, firms, and civil society interpret and mobilise CE? What governance arrangements facilitate or hinder such efforts? Do CE initiatives challenge or reproduce existing power asymmetries and industrial logics? And how do material geographies such as access to waste streams, land use regimes, or transportation networks condition the viability and shape of local CE systems?

Answering these questions requires bridging CE research with sustainability transitions theory, particularly by treating localisation not as an operational constraint, but as a core dimension of systemic change.

Embedding circularity in sustainability transitions

The recent sustainability transitions approach provide a robust framework for analysing long-term, systemic transformations in socio-technical systems (Geels, 2002; Markard et al., 2012). At its centre is the multi-level perspective (MLP), which conceptualises transitions as arising from the interplay between niche innovations, regime-level structures, and landscape-scale pressures. Originally developed to understand technological change in national or sectoral contexts, transition studies have increasingly incorporated spatial and regional perspectives (Hansen and Coenen, 2015; Raven et al., 2012; Truffer and Coenen, 2012).

These spatial extensions of transitions thinking are particularly relevant for understanding localised CE efforts. They highlight how transitions are conditioned by regional industrial structures, governance systems, and actor networks factors that are crucial in shaping the feasibility and form of circular initiatives. Moreover, transitions literature highlights the role of institutional lock-in, policy incoherence, and socio-technical regime resistance, which are directly applicable to CE’s struggles with linear production models and globalised supply chains (Klitkou et al., 2015).

In addition, sustainability transitions scholarship offers valuable tools for analysing the role of agency, experimentation, and learning in place-based transformation processes (Sengers et al., 2019). Niche innovations, often the seedbeds of circular practices, can be nurtured through local networks and protected spaces, facilitating gradual regime change or even rupture. However, despite these synergies, CE remains a relatively marginal topic within transition studies, and where addressed, is often reduced to technological or managerial substitution strategies.

This marginalisation represents a missed opportunity. A deeper integration of CE with transitions theory could yield a more holistic and critical understanding of circularity as a spatially embedded transformation process. Such an approach would attend to how circular strategies are co-produced by local actors operating within specific institutional, industrial, and cultural contexts; how they contest or stabilise incumbent regimes; and how they unfold through socio-material geographies and political economies of place.

The LECES framework: Conceptualising locally embedded circular economy systems

To understand the dynamics of CE transitions within local contexts, I propose a locally embedded circular economy systems (LECES) framework. This framework challenges the prevailing perception of CE as a universally applicable, technocratic solution. Instead, it positions CE transitions as place-based socio-industrial reconfigurations, shaped by the institutional, industrial, and cultural-material specificities of each context. The LECES framework contributes to a broader understanding of situated circular transformations that is, transformations that are not only spatially localised but also normatively and materially anchored in the social fabric of places.

The framework draws on three interlinked theoretical pillars. First, on socio-technical transitions literature that offer the concepts of embedded agency and institutional path dependency, highlighting how actors are constrained yet enabled by existing structures (Geels, 2004). Second, on evolutionary economic geography which emphasises regional capabilities and industrial trajectories in shaping technological and economic change (Boschma and Labooy, 1999). Third, on critical political economy perspectives that analyse how global production networks and institutional configurations reproduce uneven development across space (Jessop et al., 2008).

At its core, the LECES framework views localisation not merely as downscaling global strategies but as a fundamentally embedded process. Circular transitions unfold through the interplay of structural conditions and local agency, shaped by existing industrial arrangements, institutional logics, and territorial identities (Henrysson and Nuur, 2021). In this view, the CE is not a fixed model but a situated transformation, where success and failure depend on the alignment or misalignment between circular initiatives and local dynamics.

The LECES framework identifies three key dimensions through which such embeddedness manifests: institutional anchoring, industrial integration, and cultural and material embeddedness. These dimensions are both analytical entry points and sites of contestation that reveal the heterogeneity, complexity, and political nature of circular transformations.

Institutional anchoring

Institutional anchoring refers to the extent to which CE initiatives are sustained by robust, locally relevant governance arrangements. It encompasses formal institutions (e.g. policies and regulations) and informal norms (e.g. trust, legitimacy, and values), which together enable collective action and strategic coherence (Scott, 2013). Anchoring is crucial for navigating uncertainty, aligning stakeholder interests, and legitimising new practices. However, it is not merely about stability: it is also about adaptability and responsiveness to changing ecological, technological, and social conditions.

The role of institutional anchoring is twofold. First, it supports coordination and long-term commitment by embedding circular initiatives within stable governance structures (Grandoi, 1997). Second, it shapes the terrain of possibility determining who participates, whose knowledge is included, and what futures are imagined (Avelino and Wittmayer, 2016). This combined with multi-level policy coordination and stakeholder engagement platform fosters a fertile environment for experimentation and learning. In contrast, for instance, peripheral or post-industrial regions often suffer from fragmented institutions, regulatory incoherence, and short-termism (Sotarauta et al., 2021). These governance gaps constrain both the initiation and scalability of CE efforts, highlighting the uneven geographies of transition capacity.

Institutional anchoring must also be understood as a normatively contested process. Governance mechanisms are never neutral. They reflect struggles over definitions, priorities, and power (De Propris & Crevoisier, 2011). Participatory processes such as community co-design and deliberative forums can help democratise transitions, but only if they avoid procedural formalism or elite capture (Mohan, 2024). Ultimately, the institutional anchoring of CE reveals that transitions are as much about negotiating what counts as circular as they are about implementing technical solutions. In this sense, LECES invites a view of situated circular governance where legitimacy and inclusion are central to transformative capacity.

Industrial integration

The industrial integration dimension highlights how CE transitions require the reconfiguration of value creation and waste management across local production systems. Unlike linear models that prioritise throughput and externalisation, CE demands coordination, symbiosis, and systemic innovation both within firms and across sectors (Boons and Spekkink, 2012; Korsunova et al., 2022).

An example is the Kalundborg symbiosis in Denmark, where industrial co-location and mutual trust fostered material exchanges among firms (Valentine, 2016). However, such conditions are contingent and rare. In many regions, fragmented industrial structures, low absorptive capacity, or disarticulated value chains hinder CE experimentation and scaling. Moreover, circular collaboration often hinges on intermediaries local chambers, innovation agencies, or anchor firms that can broker trust and infrastructure (Fischer et al., 2021; Kanda et al., 2020).

Crucially, industrial integration is not a purely technical or economic coordination issue; it is deeply political. Global value chains often undermine local circularity, as lead firms externalise environmental burdens and prioritise scale efficiencies. SMEs, in contrast, may be more rooted in local economies but lack the resources to transform production processes or lobby for supportive policies (Sharma et al., 2021).

The tension between global optimisation and local circularity underscores the need for policies that explicitly support territorial industrial strategies, including investment in shared infrastructure, innovation platforms, and local procurement mechanisms. A situated approach to industrial integration recognises that CE cannot be operationalised in isolation from existing political economies of production and distribution. Rather, circular transitions must contend with issues of value capture, technological directionality, and regional equity.

Cultural and material embeddedness

The final dimension is cultural and material embeddedness which draws attention to the interpretive, historical, and biophysical aspects of CE. It moves beyond institutional and industrial analysis to foreground how materiality is understood, valued, and practiced in everyday life. Circularity, from this perspective, is not only a matter of flows and loops but also of meanings and ontologies.

In many Indigenous and developing countries, circularity resonates with long-standing practices of stewardship, reciprocity, and communal care (Kashyap et al., 2023). Yet dominant CE discourses driven by techno-managerial logics often marginalise or appropriate these perspectives without due recognition. LECES foregrounds the epistemic diversity of circularity, advocating for pluralistic, culturally grounded approaches.

Material embeddedness also recognises the ecological and infrastructural specificity of place. Circular strategies must be ecologically viable and culturally legitimate. For example, biomass-based CE models are suited to agro-industrial regions but impractical in arid or mountainous areas. Similarly, mining regions grappling with legacies of extractivism require CE strategies that confront questions of environmental justice, intergenerational repair, and socio-political ownership.

Cultural and material embeddedness thus reframes circularity as situated practice. It highlights how CE transitions must be co-shaped by local meanings, ecological affordances, and material constraints. This aspect resists the universalisation of CE models and instead promotes contextual reflexivity an awareness of how circular principles are translated, reinterpreted, and sometimes resisted in different places.

Towards situated circular transformations

Taken together, the three pillars of the LECES framework, institutional anchoring, industrial integration, and cultural and material embeddedness, reveal that CE transitions are never purely technical. They are socio-political, place-contingent, and fundamentally uneven. The framework challenges universal, one-size-fits-all approaches to CE and advances a view of situated circular transformations that are embedded, negotiated, and co-produced in and through place.

This shift in perspective has some implications. For scholars, it demands greater attention to regional diversity, power relations, and contextual specificity in theorising CE. For policymakers, it calls for tailored governance, place-sensitive industrial policies, and inclusive participation. For communities, it affirms the value of local knowledge, histories, and ecological sensibilities in shaping sustainable futures.

Concluding remarks and implications

This In perspective has introduced the concept of Locally Embedded Circular Economy Systems (LECES) as critical pillars to rethink how CE transitions are conceptualised and operationalised. Departing from dominant techno-globalist narratives that promote scalable, technology-driven solutions, the argument made is that meaningful and enduring circularity must be understood as situated within local contexts. Circular transitions are not only technical processes, but deeply socio-material and institutional phenomena that unfold within historically contingent and spatially differentiated settings. Through the suggestion of the framework based on three interrelated pillars (institutional anchoring, industrial integration, and cultural and material embeddedness) the paper has highlighted how CE logics can become embedded, contested, and potentially transformative at the local level.

Central to the argument of the paper is the repositioning of the local, not as a residual space for the application of national or global strategies, but as a dynamic arena where CE transitions are actively co-constructed. By highlighting the role of place-based capabilities, socio-institutional contexts, and material specificities, the paper calls attention to the often-overlooked variability and complexity inherent in CE implementation. The universalist orientation of many CE strategies tends to obscure the uneven power relations, inherited industrial structures, and deep-rooted cultural practices that shape the possibilities and limits of circularity. Instead, a relational and situated approach allows for a more pluralistic understanding of CE as an evolving process that reflects local values, constraints, and aspirations.

From a theoretical perspective, the LECES framework contributes to the debates on CE by shifting the analytical lens from abstract models of systemic change to the grounded dynamics of local transformation. It questions the scalar assumptions embedded in mainstream transition frameworks by foregrounding the socio-spatial embeddedness of CE trajectories This repositioning encourages a more critical and reflexive engagement with CE, one that recognises it not as a singular, depoliticised model, but as a contested and heterogeneous field of practice shaped by historical legacies and future imaginaries. Future research can extend this framework through empirical investigations across different regional and sectoral contexts, enabling comparative analyses of how various configurations of institutional, industrial, and cultural dynamics condition the emergence of locally rooted circular systems.

For policy, the LECES approach calls for a fundamental rethinking of how circularity is governed and communicated. It challenges the adequacy of top-down, standardised policy models that aim for national scaling without attending to territorial specificity. In their place, a LECES-informed policy agenda would prioritise the development of locally grounded governance arrangements that are participatory, adaptive, and sensitive to local institutional ecologies. It would also support territorially embedded industrial strategies that enhance inter-firm collaboration, SME participation, and regional policies aligned with circular principles. Moreover, such an agenda would recognise the legitimacy of informal practices, traditional knowledge systems, and alternative valuation regimes, thus broadening the epistemological foundations of CE beyond techno-scientific rationalities. Aligning with broader ambitions for just transitions, regional resilience, and inclusive development, such an approach would contribute to more equitable and democratically grounded sustainability transitions.

Practically, the LECES framework offers a set of tools for local governments, businesses, and civil society actors seeking to advance circular practices in contextually appropriate ways. It can guide the identification of institutional gaps, governance frictions, and coordination failures that impede the institutionalisation of circularity. It can also help reveal latent industrial complementarities and opportunities for synergistic resource use that are often hidden within fragmented local economies. Just as importantly, it invites practitioners to engage with the cultural and material legacies of place to see in local identities, norms, and landscapes not obstacles to be overcome, but assets to be mobilised in the co-production of meaningful and durable circular futures.

Ultimately, the advancement of locally embedded CE systems requires a fundamental shift in how we think about and enact circularity: not as something to be delivered to localities, but as something to be co-created within and through them. This demands a deep engagement with the institutional histories, industrial structures, and socio-cultural fabrics of place, an engagement that is at once analytical, political, and practical. In doing so, we may begin to reimagine the CE not as a model to be replicated, but as a pluriverse of locally grounded transitions shaped by diverse actors, values, and visions of sustainability.