2021 Entrepreneurial Activity Review

In 2022, a major priority of the Polish government is to boost entrepreneurial activity. This is the goal of the new “Polish Deal” signed at the end of 2021, which aims to simplify and cut taxes for entrepreneurs and to incentivize investment in innovative technology. Such steps, and likely more, will be necessary if Poland wants to boost its entrepreneurship, as both early-stage activity and entrepreneurial confidence are quite low in the country.

In 2021, Poland’s TEA rate was 2.0%, lowest among GEM Level B economies, and down from 3.1% in 2020. This low level of early-stage activity is contrasted with a relatively high EBO rate of 11.1% in 2021. Such a gap between TEA and EBO indicates that, for some time, many new businesses have not been able to mature into established ones, while older businesses have potentially gained an incumbency advantage. This kind of advantage can be achieved by the existence of policies that favours established firms, or perhaps by consumer preference for these kinds of business. Helping early-stage entrepreneurs reach the established stage should be a policy priority.

Otherwise, there will be little incentive to start new, innovative businesses. On a more positive note, the rate of Polish TEA respondents who said it was more difficult to start a business than it was a year ago was 41.9%, which was on the lower end of GEM Level B economies. A result below 50% indicates that more early-stage entrepreneurs find it is getting easier to start their business. Yet only 24.8% of TEA respondents and 21.6% of EBO respondents stated that they saw new business opportunities as a result of the pandemic, among the lowest of GEM peer economies, indicating these entrepreneurs may not be responding to the new business realities. Additionally, only 20.1% of TEA respondents and 4.1% of EBO respondents plan on using more digital technology over the next six months to grow their business. This also demonstrates low confidence in their ability to innovate to meet new consumer realities caused by the pandemic.

2021 Framework Conditions Review

Across most framework conditions, Poland scored below average compared to its Level B peers. However, in the area of Entrepreneurial Finance, Poland’s 4.7 score was the fifth highest among GEM Level B economies. This could reflect the new finance opportunities that have emerged as Poland has joined the EU and integrated more into its financial investment system. Yet it received a 4.1 score on Ease of Access to Entrepreneurial Finance, ninth among GEM Level B economies, indicating that improvements could be made in the distribution of those financial flows.

On governance, Poland’s framework conditions scores signalled contradictory trends. On Government Policy: Support and Relevance, Poland’s 3.5 score in 2021 was a sharp decrease from 4.3 in 2020. Meanwhile, Government Policy: Taxes and Bureaucracy received a 4.2 score this year, a sharp increase from 2.8 in 2020. This suggests that the government had entrepreneurship as a lower priority in 2021, but that bureaucracy that had previously hindered entrepreneurship had actually improved. How these conditions will be affected in the next couple of years by the new Polish Deal will give insight into that program’s effectiveness. Poland performed best on the condition Ease of Entry: Market Dynamics, which received a 6.4 score, third among GEM Level B economies. This means that entrepreneurs face fewer regulatory barriers to accessing markets, which is one obstacle removed in helping new businesses in Poland grow into established ones.