2021 Entrepreneurial Activity Review

In 2021, the Slovak Republic’s early-stage entrepreneurial activity declined significantly, to 6.4%, from 13.9% in 2020. This was likely to have been caused by the lagging impact of COVID-19, as cases in the country did not rise considerably until the very end of 2020 and through the first half of 2021. As a result, entrepreneurs were reacting to new realities forced by the pandemic through much of the past year. This can also be seen in the rate of TEA respondents who said that starting a business in 2021 was more difficult than the previous year.

In 2021 this rate was 57.5%, a rise from 53.6% in the 2020 survey, reflecting a slight decline in confidence over this period. The lasting impact of COVID-19 can also be seen in the number of Slovakian survey respondents who reported their household income had “strongly decreased” as a result of the pandemic. In 2020, this rate was just 12.5%. However, in 2021 it has increased to 17.3%, meaning a more constrained consumer environment in the country.

Despite these challenging macro forces, EBO in the Slovak Republic actually remained steady from 2020 to 2021, at 6.5%. Slovakian policymakers should monitor EBO rates, however, as these businesses typically lag the rise or fall in early-stage businesses. Therefore, unless the Slovak recovery from COVID-19 is particularly strong before the next GEM survey, EBO next year may fall. This is made all the more likely by the fact that so few EBO respondents said they saw new opportunities because of the pandemic. In 2021, this rate was only 13.4%, one of the lowest among Level B GEM economies.

In light of these factors, Slovak policymakers should look for ways to boost overall early-stage entrepreneurship activity. Otherwise, there will be an insufficient number of new businesses to move into the established business stage in the near future. This will impact both employment and consumer choices. One area to target specifically is incentivizing more new businesses to implement digital technologies. In 2021, only around 17% of both TEA and EBO respondents said they planned on using more digital technologies to sell their products in the next six months. This was the lowest rate among GEM Level B economies and a statement about the willingness of Slovakian entrepreneurs to meet new consumer demands.

2021 Framework Conditions Review

The Slovak Republic’s 2021 framework condition scores demonstrated a mix of both enabling and constraining factors for entrepreneurs. On finance, the country scored relatively well. The Entrepreneurial Finance condition received a 4.5 score, placing it sixth among GEM Level B economies, while Ease of Access to Entrepreneurial Finance scored 4.5, fourth among these economies. Improving on these conditions, or at least maintaining them, should be a policy priority in the

Slovak Republic as most new businesses cannot grow without access to finance. If increasing earlystage entrepreneurship is the goal, then finance will play a major role. However, the Slovak Republic’s governancerelated conditions scored quite poorly this year, declining overall from 2020. The condition Government Policy: Support and Relevance scored 3.4 in 2021, 14th among GEM Level B economies and down from 3.7 in 2020. The condition Government Policy: Taxes and Bureaucracy actually improved to 3.4 in 2021, but was still relatively low among GEM Level B economies, ranked 19th. Government

Entrepreneurial Programs also declined in 2021. These scores reflect a need for the Slovak government to have stronger, more visible policies aimed specifically at entrepreneurs. Some new policies were unveiled in 2021, but were relatively small in scale. Boosting these efforts could show potential entrepreneurs that the state is invested in their success.