Circular Economy-Related Resource Efficiency, Green Innovation capacity, and Sustainable Economic Growth in the East African Community: Evidence from Panel Econometric Analysis (2000-2024)

The shift to circular economy (CE) frameworks and green innovation (GI) has become crucial to worldwide sustainability initiatives, but concrete evidence regarding their joint impact on economic performance in Africa is still scarce. Driven by this disparity, this research examines the separate and combined effects of CE adoption and GI on sustainable economic growth within the East African Community (EAC) from 2000 to 2024. Based on the hypotheses suggesting that circular economy (CE) and green innovation (GI) have a positive impact on sustainable growth, that GI enhances the CE-growth connection, and that institutional and macroeconomic factors shape these effects, the research investigates the impact of CE, GI, and renewable energy on sustainable economic growth in the East African Community (EAC) through panel regression (FE/RE), dynamic system-GMM, and interaction models. Empirical findings indicate that resource productivity (FE coefficient = 0.312, p < 0.05), R&D investment (0.421, p < 0.05), and the CE×GI interaction (0.167, p < 0.05) notably increase GDP per capita, with long-run effects being considerably greater than those observed in the short-run. The adoption of renewable energy also positively impacts growth, whereas CO₂ emissions have a negative influence (–0.271, p < 0.1), underscoring environmental trade-offs. Short-run dynamics indicate that CE and GI produce quick yet modest growth, while the correction error term (ECT = − 0.421, p < 0.01) verifies swift adjustment toward long-run equilibrium. Cross-national evaluations reveal varied levels of preparedness: Kenya and Rwanda excel in CE policy and innovation capabilities, Uganda and Tanzania display moderate advancements, while fragile nations like South Sudan, Burundi, and Somalia need essential policy and infrastructure assistance. The interaction term (CE × GI) is positive and statistically significant across different model specifications, validating the complementarity between circular practices and innovative capacity. Variables like human capital, trade openness, foreign direct investment, and governance quality positively influence sustainable growth, while inflation and CO₂ emissions have negative impacts. The error-correction coefficient (–0.462) shows that nearly 46% of short-term divergences from the long-run equilibrium are rectified each year, highlighting a stable and consistent adjustment mechanism. The results highlight that the collaboration between CE and GI, backed by renewable energy and institutional capability, is essential for sustainable development, consistent with ecological modernization theory and the Porter hypothesis. The research advises improving regional CE policies, investing in innovation ecosystems, augmenting human capital and governance standards, and creating integrated CE–GI strategies customized to the unique circumstances of each country, to promote inclusive, resilient, and low-carbon development in East Africa.