Measuring the digital economy: A two-stage framework for transparent composite index construction

Measuring the digital economy presents persistent conceptual and methodological challenges, particularly in constructing robust, transparent, and policy-relevant composite indices. These challenges are especially critical in the context of digital information societies, where indicators assess national digital capacity, information infrastructure, and digital development. This study proposes a two-stage framework for digital economy measurement that effectively bridges these gaps by integrating key decision points in index construction. Stage 1 clarifies the scope, objectives, units of analysis, and intended audience, ensuring conceptual coherence and practical relevance. Stage 2 systematically addresses methodological decisions, including outlier treatment, handling missing data, normalization, weighting, aggregation, and robustness checks, thereby enhancing replicability and reducing arbitrariness. The proposed framework serves as a systematic checklist for transparent index construction. It contributes to the literature on digital development and information-based measurement by offering a structured tool for policymakers, academics, and practitioners engaged in benchmarking, comparative analysis, and evidence-informed decision-making.