2023 POLICY ROADMAP

Strong economic growth since the pandemic looked set to be halted in 2023, with inflation at 11% (five points above the Eurozone average) and increased uncertainty tightening financial conditions. Lithuania has also managed an influx of around 80,000 refugees from Ukraine, around a quarter of which have found employment. Lithuania’s real GDP is expected to decrease by 0.4% in 2023 due to high inflation weighing on private consumption and weak global demand.

The latest data showed Lithuania with around 1,000 startups in 2023, with one-third selling to consumers and two-thirds to other businesses. The Lithuanian economy was still feeling the effects of the war in Ukraine, with increased energy prices and broken supply chains in 2023. However, the government had developed a business support package to reduce the energy price shock, while the “Recovery and Resilience Plan” (RRP) aimed to create a fairer and growth- oriented tax system.

2023 Framework Conditions Review1

Lithuania’s high-quality entrepreneurial environment dipped slightly when the war started in Ukraine. By 2023, it had been restored. From 2022 to 2023, 11 of Lithuania’s 13 Entrepreneurial Framework Condition (EFC) scores had increased, with just two reduced (and not by much). The largest increases were for Entrepreneurial Education Post-School, Ease of Entry: Burdens and Regulations and for Government Entrepreneurial Programs. In both 2022 and 2023, Lithuania had just one EFC scored as insufficient: Entrepreneurial Education at School. As with many economies, this EFC had the lowest score and Physical Infrastructure had the highest, for both 2022 and 2023.

In 2021, Lithuania had a National Entrepreneurial Context Index (NECI) score of 6.1, placing it fifth among the 47 economies in GEM that year. This score fell to 5.8 in 2022 (6th) but had recovered to 6.1 in 2023, placing it fourth among 49 economies. Additional questions in the 2023 National Expert Survey (NES) sought an assessment of the quality of social support for women entrepreneurs, and for their access to resources compared to men. Lithuania scored well for social support with 6.2, ranked fourth, but badly for relative access to resources with 4.5, ranked just 36th of the 49 economies.

2023 Entrepreneurial Activity Review

Lithuania participated in the GEM Adult Population Survey (APS) in both 2022 and 2023. More than one in three adults reported that their household income had fallen in 2023, up sharply from the year before.

Lithuania has a high profile for entrepreneurship, with seven out of 10 adults knowing someone who
had recently started their own business, third highest in Level B, while three out of five adults saw good opportunities to start a business locally, and just slightly fewer considered themselves to have the skills and experience to start their own business. Of those who saw good opportunities, around one in three would not start a business for fear it might fail, the second highest proportion in Level B. One in eight of those not already doing so expected to start a business within the next three years, down a little on a year earlier.

Despite the improving entrepreneurial environment, the percentage of adults starting or running their own business in Lithuania in 2023 (6.7%), was well down on the 12.7% of the year before. Much of this decline was in male entrepreneurship, falling from 16.6% to 6.1% in just one year, while female entrepreneurship fell from 9.0% to 7.2%. So from having more than three men starting businesses for every two women doing the same in 2022, just one year later the rate of women entrepreneurs exceeded that of men, despite the unequal access to resources noted earlier. In the same period the Established Business Ownership rate almost doubled, to nearly 15%, the second highest in Level B and fourth highest in GEM 2023.

Earning a living because jobs are scarce was by far the dominant agreed motivation, agreed by four out of five new entrepreneurs. Just 15% of those entrepreneurs had customers outside their country, and only one in five was expecting to use more digital technology in the next six months. Despite almost half of those starting or running a new business being solo entrepreneurs, around one in five new entrepreneurs expected to employ another six or more people over the next five years.

1 A brief description of the GEM approach is given in the footnote on p. 107.