The rapid development of the digital economy has posed formidable challenge in accurately measuring its level and impact. This review systematically assesses the existing approaches used to measure the digital economy, identifies the primary indicators used for index construction and highlights the research gap through a comprehensive literature review. It reviewed the relevant articles from the Web of Science in the field of “Economic and Business” from 2022 to 2024. The review reveals that index construction and production efficiency approaches are used by the scholars to gauge the levels of the digital economy. However, index construction emerges as the most frequently adopted approach. Scholars often employ the entropy method, Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) entropy method and Principal Component Analysis (PCA) to compute the digital economy index. Additionally, this review also highlights the directions for future research, emphasizing a need for novel approaches and methods that may capture the complexity and the dynamic understanding of the digital economy and its multifaceted impacts on global economic development.
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