Abstract
Abstract This study examines the determinants of regional economic performance in Kazakhstan in the context of its transition toward a circular economy. It focuses on the combined effects of environmental protection expenditure, small and medium-sized enterprise activity, and fixed capital investment. Using panel data for 16 regions from 2005 to 2024, the study applies two-way fixed effects models and a dynamic panel approach based on the Anderson-Hsiao estimator to account for growth persistence and potential endogeneity. The results show that the growth effects of environmental expenditure, SME activity, and fixed capital investment vary across model specifications. Environmental protection expenditure is positively associated with regional growth in static models, but this effect becomes insignificant once endogeneity is addressed. SME activity shows a negative association in static specifications, but a positive effect in dynamic IV estimates. Fixed capital investment is positively significant in static models, although its effect weakens in dynamic specifications. Overall, the findings suggest that institutional quality, regional heterogeneity, and policy coordination shape the economic outcomes of sustainability-oriented policies. By integrating environmental, entrepreneurial, and investment-related factors within a single empirical framework, the study offers new evidence on the context-dependent nature of regional growth in a transition economy and provides policy insights for designing regionally differentiated development strategies.