Strategies to overcome barriers to Circular Innovations in Latin America

Abstract

Latin America faces significant environmental and socio-economic challenges due to its predominant "extract, transform, and dispose" economic model. The Circular Economy (CE) offers a crucial alternative by focusing on sustainability through rethinking and redesigning production processes to minimize waste and maximize resource efficiency. Within this framework, Circular Innovations (CIs) play a vital role in promoting sustainable practices. This research seeks to adapt the Technological Innovation Systems (TIS) framework to better identify and overcome barriers to CIs in Latin America. The study began with a comprehensive literature review, which provided a foundation for adapting the TIS framework to both the principles of circularity and the specific context of Latin America. This adapted framework was then applied through case studies in the region, offering a practical examination of the challenges and opportunities for CE in Latin America. The research synthesized insights from literature, case studies, and expert interviews to develop definitions of CE and CIs that are tailored to the Latin American context. The Circular Economy in Latin America is defined as the process of rethinking and redesigning production and consumption systems to minimize waste and maximize resource efficiency. This approach emphasizes waste management, recycling, and the transformation of waste into valuable resources throughout the entire lifecycle of products and services, aiming to achieve sustainability through regulatory alignment, technological innovation, and societal engagement. Circular Innovations are defined as innovations that align with these principles, focusing on waste minimization, resource efficiency, and sustainability. The application of the adapted TIS framework revealed several significant barriers to the diffusion of CIs in Latin America. These include challenges in scaling up circular production processes efficiently, inefficiencies in transportation and distribution networks, and a significant lack of customer awareness and understanding of circular economy products. Additionally, there is a low willingness to pay for sustainable products, exacerbated by the lack of alignment in regulatory frameworks and inconsistent environmental laws. The framework also highlighted issues such as unclear and overly stringent regulatory requirements, the absence of standardized norms, competitive pricing challenges, and a lack of supportive infrastructure and incentives for circular economy initiatives. To address these barriers, the research developed a series of niche strategies tailored to the specific challenges identified in the Latin American context. These strategies include the Demo, Experiment, and Develop Niche Strategy, which focuses on creating experimental spaces for innovation; the Subsidized Niche Strategy, aimed at providing financial support to emerging circular innovations; and the Geographic Niche Strategy, which targets specific regions with unique challenges and opportunities. Other strategies include the Educate Niche Strategy, which emphasizes the importance of raising awareness and knowledge among consumers and policymakers; the Top Niche Strategy, which focuses on leveraging high-impact innovations; and the Policy Advocacy Strategy, which involves engaging with regulatory bodies to align policies with circular economy goals. These strategies were derived from the adapted TIS framework by systematically analyzing how various influencing conditions affect the framework’s building blocks. The connection between these influencing conditions and the identified barriers provided a clear pathway for developing strategies that are both targeted and effective. The study highlights the critical role of niche strategies in promoting circularity in Latin America, ensuring that circular innovations can achieve large-scale impact and contribute significantly to sustainable development in the region.