Circular economy as a strategy for economic diversification in Libya

Abstract

Libya faces a persistent diversification challenge because national income, public finance, employment opportunities, and external balances remain strongly linked to hydrocarbon activity. This article examines the circular economy as a practical strategy for broadening Libya’s non-oil productive base through resource efficiency, waste valorization, repair, reuse, recycling, and circular industrial services. The research problem is that diversification debates in Libya often emphasize broad sectoral expansion while paying limited attention to material flows, municipal waste, construction residues, plastics, agricultural by-products, and idle assets as sources of economic value. The study applies a review article and conceptual policy analysis method based on recent international literature, Libya-focused policy reports, and a structured sector-readiness assessment. The results identify six priority pathways: construction material recovery, municipal waste valorization, plastic recycling, agri-food residue utilization, repair and remanufacturing services, and water reuse. Construction materials and municipal waste show the highest combined potential because they connect large material flows with local enterprise creation and reduced import dependence. The discussion argues that circular diversification in Libya requires coordinated governance, reliable data, municipal pilots, green procurement, finance for small and medium-sized enterprises, and standards for secondary materials. The study concludes that circular economy policies can strengthen diversification only when they are treated as economic development instruments, not merely environmental interventions.