In Latvia, the data reflects a similar trend, with a growing hesitation to start a business due to fear of failure. The GEM 2023/2024 Global Report emphasizes that entrepreneurial education continues to be perceived as inadequate in Latvia, with national entrepreneurship experts assessing the quality of education and training programs as poor. This indicates the need for further support and improvement in the entrepreneurial ecosystem in Latvia, both in terms of education and policies that can foster greater confidence among potential entrepreneurs. Addressing these gaps is crucial for creating a more supportive environment for new ventures in the country.


2024 Framework Conditions Review

In 2024, national experts rated the overall quality of Latvia's entrepreneurial environment as slightly above satisfactory, with a National Entrepreneurial Context Index (NECI) score of 5.1, up from 5.0 the previous year, placing Latvia 14th.

However, in terms of Government Policies and Entrepreneurial Finance framework conditions, Latvia still lags behind both Lithuania and Estonia.


Entrepreneurial Activity Review in Latvia

In 2024, just over one in five Latvian adults reported a fall in household income, a slightly higher proportion than the year before. Similarly, a comparable number of people expect to start a business in the next three years, also slightly higher than in 2023. Entrepreneurial awareness is relatively strong, with almost half of adults knowing someone who has recently started a business. Confidence in entrepreneurship is high, with more than half of adults feeling they have the skills or experience to start their own business. However, only two in five see good opportunities locally. Of those who do see opportunities, almost half would not pursue them due to fear of failure.

The proportion of adults starting or running a new business in Latvia has slightly decreased, now at about one in eight. Men are marginally more likely than women to be early-stage entrepreneurs. Established business ownership has also dropped, from one in eight two years ago to just under one in twelve in 2024.

Three in five new entrepreneurs cited "to earn a living because jobs are scarce" as their motivation, while one in three were motivated by "to make a difference in the world." Most new entrepreneurs (three in five) expect to use more digital technology to sell their products in the next six months, and half have customers beyond Latvia. Job optimism is high, with three in ten new entrepreneurs expecting to employ at least six people in the next five years. Notably, two in five prioritize environmental or social impacts above profitability or growth in their businesses."


Importance of Artificial Intelligence (AI) Adoption

Despite the increasing awareness, Latvia still lags behind many other economies in terms of AI adoption. Compared to leading markets where over 50% of entrepreneurs expect AI to be crucial for their business, the Baltic region remains cautious.

The report reveals that 20% of early-stage entrepreneurs in Latvia consider AI to be very important for their business operations over the next three years. This figure is higher than the 14% of established business owners who share the same view. This trend suggests that AI’s role in business innovation will likely expand as younger and more agile companies integrate AI into their strategies.

AI offers small countries the opportunity to rapidly enhance their competitiveness by driving innovation and optimizing various processes. Its effective use can promote sustainable economic growth and strengthen Latvia's position in the global market. Therefore, it is essential for Latvian entrepreneurs to adopt AI technologies more actively and strategically, emphasizes researcher Marija Krūmiņa (BICEPS), who, together with Anders Paalzow (SSE Riga), has analyzed Latvia's data.


About the Global Entrepreneurship Monitor (GEM)

GEM is a global research consortium that surveys entrepreneurs to analyze their motivations and the national context of entrepreneurship. It has been collecting data for 26 years. The data on Latvia were collected and analyzed by the Stockholm School of Economics in Riga (SSE Riga) and the Baltic International Centre for Economic Policy Studies (BICEPS), in collaboration with SKDS.

To download the full 2024/2025 report:
https://www.gemconsortium.org/reports/latest-global-report

 

For additional information:
BICEPS Researcher Marija Krūmiņa, marija@biceps.org