According to the Global Entrepreneurship Monitor (Global Entrepreneurship Monitor – GEM) 2024/2025 report Entrepreneurship Reality Check, released this week in Bilbao, Spain, fear of business failure is rising across the world. In 2024, 49% of those surveyed said they would not start a business because they were afraid it might fail, compared with 44% in 2019. Entrepreneurs are also unclear about the place of artificial intelligence in their businesses. More than 150,000 respondents from 50 different economies around the world took part in the survey.
An assessment of Latvia's business environment in 2024
In Latvia, the data reflect a similar trend, with growing hesitancy to start a business for fear of failure. The GEM 2023/2024 Global Report stresses that entrepreneurship education in Latvia is still seen as inadequate, and national entrepreneurship experts likewise rate the quality of education and training programmes as low. This points to a need for further support and improvement in Latvia's entrepreneurial ecosystem, in both education and policy, in order to build greater confidence among would-be entrepreneurs. Addressing these shortcomings is essential to creating a more supportive environment for new businesses in Latvia.
In 2024, national experts rated Latvia's business environment as slightly above satisfactory, with a National Entrepreneurship Context Index (NECI) of 5.1, marginally higher than the 5.0 of the previous year, placing Latvia 14th. When it comes to government policy and business finance, however, Latvia still lags behind both Lithuania and Estonia.
An overview of entrepreneurial activity in Latvia
In 2024, one in five adults in Latvia reported a fall in household income, a slight increase on the previous year. A similar number, again one in five, plan to start a business within the next three years, which is also a slight increase on 2023.
Entrepreneurship enjoys relatively high standing, with almost half of adults knowing someone who has recently started a business. More than half of adults believe they have the skills or experience needed to start a business of their own. Even so, only two in five see good opportunities in the local market. Of those who do see opportunities, almost half will not act on them for fear of business failure.
The importance of adopting artificial intelligence (AI)
Despite growing awareness, Latvia still lags behind many other economies when it comes to adopting artificial intelligence. Compared with leading markets, where more than 50% of entrepreneurs believe artificial intelligence will be crucial to their business, the Baltic region remains cautious.
The report finds that 20% of new entrepreneurs in Latvia consider AI very important for running their business over the next three years. Owners of established businesses rate AI even lower, with 14% of existing business owners considering AI important in business. This trend suggests that the role of AI in business innovation is likely to expand as younger, more agile companies integrate AI into their strategies.
Artificial intelligence offers small countries a chance to boost their competitiveness rapidly by driving innovation and streamlining a range of processes. Using it effectively can foster sustainable economic growth and strengthen Latvia's position in the global market. It is therefore essential that entrepreneurs in Latvia make more active and more purposeful use of the opportunities AI technology offers, stresses researcher Marija Krūmiņa, who analysed the Latvian data.
About the Global Entrepreneurship Monitor (GEM)
GEM is an international research project that has been documenting entrepreneurs' attitudes and motivations and the national context for entrepreneurship for 26 years. Data on the development of entrepreneurship in Latvia are collected and analysed by the Stockholm School of Economics in Riga (SSE Riga) and the Baltic International Centre for Economic Policy Studies (BICEPS), in cooperation with SKDS.
The GEM report is available here:
https://www.gemconsortium.org/reports/latest-global-report