Quality over quantity: developing a PCA-Based framework for measuring economic growth quality - evidence from Armenia

This study develops a multidimensional Quality of Growth Index (QGI) to evaluate the qualitative dimensions of economic performance in post-transition economies. The framework encompasses six interrelated pillars (Inclusivity, Sustainability, Productivity, Innovation, Social Development, and Governance) and employs Principal Component Analysis (PCA) to generate objective, data-driven weights for each component. Using Armenia as a case study (2007–2023), the analysis reveals a shift from quantity-driven to quality-oriented growth, marked by rising sustainability and innovation yet constrained by governance inefficiencies. Robustness tests confirm the statistical stability of the QGI under alternative model specifications, while its evolution demonstrates resilience during major shocks, including the 2009 global crisis and the 2020 pandemic. The results underscore that in post-transition economies, sustainable development increasingly depends on advances in innovation, human capital, and institutional quality. The proposed QGI provides policymakers with a replicable framework to assess and strengthen the structural quality and resilience of economic growth.