Assessing Economic Growth Quality

Purpose: The aim of this study is to examine the quality of economic growth according to the stages of its generation and manifestation.   Theoretical framework:  The use of quantitative estimation when exploring economic growth can lead to misinterpretation or inaccurate judgments, since the economic reality implies not only quantitative, but also qualitative components. The goal of economic growth, its planning and statement are not an end in themselves, they are aimed to improve the welfare of society. Its implementation implies an improvement in the qualitative facet of economic growth. To date, attempts to assess the quality of economic growth are mostly based on its social outcomes. With such an approach, we miss the formation process of economic growth, focusing only on its effects.   Design/methodology/approach: There are developed special indices for both economic growth generation quality and economic growth effects quality, based on macroeconomic and social indicators that play a significant role in the relevant process. These together, as subindices, form an economic growth quality index. The latter is calculated for 76 countries during 2005-2020. The following techniques and indicators are used in the process of the index calculation - normalization, percentiling, optimal lag length selection informational criteria, cointegration tests.   Findings:  The research empirically confirms that the economic growth quality in the world manifests itself more steadily than it is being formed. Between the leaders and the countries in the last positions in index rankings, the drastic difference mainly lies in their productivity, expenditures on education and lending to the private sector through domestic credit.   Research, Practical & Social implications: The nature of the proposed economic growth assessment can serve as a baseline for further research studies in this context. On the other hand, the findings of this study can be used to analize the drivers and barriers to growth in each of the observed country.   Originality/value: The approach according to which the economic growth quality index is constructed gives an opportunity to observe economic growth not as a static indicator but as a breathing organism, describing the development process with detailed growth causes and consequences.