Measuring digital economy in China

Abstract

The COVID-19 pandemic has highlighted the importance of the digital economy in restoring economic and social development, creating more jobs and improving people's well-being. To inform policy makers about changes to digital strategies, measuring the digital economy is a prerequisite. This study aimed to compile an index of digital economy at the provincial (municipalities, autonomous regions, collectively referred to as "provinces") level to present an accurate and in-depth depiction of how it has developed in China. Our sample covers 31 provinces in China, over the period 2010–2020. This paper firstly constructs the digital economy index system from the four dimensions of digital users, digital platforms, digital industries and digital innovation, and then adopts a combination of entropy weighting method and grey target theory to measure the digital economy index. This paper study revealed that China's digital economy has been on an upward trend from 2010 to 2019 and has a decline in 2020, and the digital innovation is an important driving force for the growth of the digital economy index. The convergence of China's digital economy is decreasing, indicating that the gap in digital economy development between provinces is increasing. The proposed index in this study can be used as a screening tool, decision making tool, benchmarking tool and guidance of high-quality digital economy development.

Keywords

• digital economy
• index compilation
• entropy grey target method
• sigma convergence
• cluster analysis