Global Entrepreneurship Monitor
Global Entrepreneurship Monitor
The Global Entrepreneurship Monitor (GEM) is a major international project aimed at describing and analyzing the entrepreneurial activities in a wide range of countries. Hence, the Latvian GEM displays the Latvian entrepreneurship in an international context. Latvia is one of 69 countries, which participates in the project.
According to the latest GEM study (2015-2018 Latvia Report), Latvians consider themselves to be sufficiently skilled and educated for business activities; however, compared to average Europeans fewer Latvians see business opportunities in the area where they live. Among Latvians who see good opportunities for business, the share of those who are afraid of failure keeps increasing.
About 14% of Latvians aged 18-64 were involved in early-stage entrepreneurial activity in 2017. 4.4% were involved in entrepreneurial activity at their current workplace.
The Latvian population in all age groups is more active in entrepreneurial activity compared to Europe on average with one exception. Involvement of individuals aged 55-64 still lags behind.
In 2017, 4.3% of 55-64-year-old Europeans were involved in early-stage entrepreneurial activity, whereas in Latvia the rate was 2.6%.
For every ten male entrepreneurs in Latvia, there are around six female entrepreneurs. This is very similar to what is observed in Estonia and in Europe on average.
23.7% of new ventures started business in wholesale and retail, 16.3% in health, education, government and social services, 12.5% in manufacturing, and 11.5% in agriculture.
Latvia ranks fourth in Europe, after Switzerland (33.2%), Croatia (30.4%) and France (27.9%), in terms of the growth ambitions of early-stage entrepreneurs. However, after 2012, the growth ambitions of Latvian early-stage entrepreneurs steadily decreased. In 2017, 27.5% of entrepreneurs in Latvia were forecasting the creation of six or more jobs over the next five years. This decrease in hiring expectations requires serious attention from policymakers in identifying constraints (rigid labour regulations, poor availability of skilled educated labour, and limited access to entrepreneurial finance).
The level of innovativeness of Latvian entrepreneurs has been stable in recent years and is very similar to the European average. In 2017, 28% of Latvian entrepreneurs were introducing new or unique products to some or all of their customers.
The percentage of Latvian entrepreneurs in 2017 who abandoned their business was rather high (4.2%) compared to their peers in Europe (2.9%). The increase in the discontinuation rate (2015 – 3.4%, 2016 – 3.3% and 2017 – 4.2%) signals that not so many startup attempts in Latvia have been successful in recent years, with many entrepreneurs dropping out. A decision to discontinue because of the unprofitability of the business was made in 28.9% of cases. However, the importance of this reason has declined over time (2015 – 42.4%, 2016 – 38.6%). Personal reasons (20.3%) and bureaucracy (24.6%) are also important reasons for exit. Bureaucracy as a reason for discontinuation in Latvia has become more important compared to previous years (2015 – 12.0%, 2016 – 20.6%).
The Entrepreneurial Framework Conditions (EFCs) evaluated by national experts as the most positive in Latvia over the last three years are physical infrastructure, commercial infrastructure and social and cultural norms. The three EFCs with the lowest scores from Latvian experts are government policy (mainly taxes or regulations that are supposed to encourage SMEs), R&D transfer (the extent to which national research and development leads to new commercial opportunities and is available to SMEs), and entrepreneurship education at the basic school level (primary and secondary).
The Report on Latvia has been written by BICEPS researcher Marija Krumina, the leader of the GEM team in Latvia, and SSE Riga Rector Dr Anders Paalzow.