The role of fiscal and monetary policy in stimulating Circular Economy in Iraq
From Firenze University Press Journal: Aestimum
Safaa Ali Hussein, College Of Administration & Economics — University of Baghdad
Ahmed Abdulzahra Hamdan, College Of Administration & Economics — Mustansiriyah University
The issue of the Circular Economy is not a new issue to several countries, especially the developed ones. Here in Iraq it is considered newly introduced, despite the few at-tempts to establish projects that concern recycling most of them were doomed to fail, due to two main reasons: the first one is the financial and administrative corruption widespread in all departments of the country, the second one is the priorities of public spending. It is well known that Iraq was subjected to two major attacks, the ISIS entry attack in 2014 to Iraq. ISIS occupied about a third of Iraqi lands which resulted in a collapse in oil prices, as Iraq de-pends almost entirely on oil revenues in its budget which is the second attack. This made the Iraqi governments point public spending towards the priority of preserving national security and liberating Iraqi lands. Therefore, the circular economy project proposals were not considered a priority under these circumstancesIn the past decade, the circular economy (CE) has established itself as an influential model for economic development, with the Chinese government and European Union being the first to follow this policy in their country. The goal of the model is to create circularly material that flows to break the current linear economic state, taking into consideration creating business value for its participants. (Corvellec et al., 2020, p. 98).The CE concept invites societies to reevaluate their use of waste and resources. The concept proposes the replacement of the current “take-make-use-dispose” system, with a system that addresses structural waste — encompassing visible, and hidden forms of waste. For example, recycling materials as opposed to landfilling or incinerating, and the intensive use of them through cascading approaches, as well as sharing and ownership models.
The application of circular strategies in ad-dressing structural waste to improve resource efficiency, productivity and reverse resource loss. (Blomsma and Tennant, 2020, p. 1).The implementation of circularity materials is increasing in developed countries, while the developing countries are still struggling to transition to the circular economy due to the lack of economic funds, public awareness and political will, among other reasons. Developing countries like China, Serbia and India started to implement such principles meanwhile, low-income countries are commonly introducing new projects or plans with no effectiveness. (Ferronato et al., 2019, p. 367).
The study aims to find the answer to these questions. Firstly, does Iraq have the basic elements for the transition to a circular economy? Secondly, what is the best source of funding to stimulate the transition to the circular economy in Iraq? The government by its fiscal instruments or monetary policy by banks will be more suitable? Lastly, what will be the results of the Iraqi economy if circular economy projects were implemented?
