Turkey last participated in GEM in 2018. Since that time, the country has experienced significant challenges, including the COVID-19 pandemic in addition to currency volatility. Yet the level of entrepreneurial activity in the country has remained fairly stable. In 2021, Turkey’s TEA rate was 15.7%, up a bit from 14.2% in 2018, while EBO increased to 11% in 2021 from 8.7% in 2018. This suggests a resilient entrepreneurial sector, but there are several risks identified by GEM survey results that could undermine future activity.

While Turkey’s GDP managed to grow by an annual 1.8% in 2020 (one of the few large economies to do so), and is poised to grow by more than 8% in 2021 according to the IMF, households still struggled financially, in part from inflation but also the impact of COVID-19. In 2021, 54% of Turkish respondents said their household had lost income as a result of the pandemic, one of the higher rates among GEM Level B economies. The challenges faced by Turkey have likely played a role in reducing business confidence among the general population. For example, in 2021, only 31.9% said they saw good opportunities to start a business where they lived, down from 44% in 2018. This is despite the fact that 59.3% claim to have the knowledge, skills and experience to start a business. Such a disparity shows that entrepreneurial talent exists among the general population but there are few good opportunities to use it. If Turkey could maintain a more stable economic environment, opportunity identification would likely increase, matching the talent level already existent in the population.

Turkish entrepreneurs also sense diminishing opportunities. In 2021, 62.4% of TEA respondents said it was more difficult to start a business than in the previous year, while only 33.2% indicated they saw new business opportunities as a result of the pandemic. Yet, despite this assessment, 55.2% of TEA respondents and 50.7% of EBO respondents said they planned to use more digital technology to grow their business in the next six months. This suggests a desire to shift business strategy to meet new consumer demands, particularly stemming from new realities generated by COVID-19. With such willingness to invest in their business, there is significant potential to grow entrepreneurial impact.

Providing a more stable economic environment would help more entrepreneurs find returns on those technological investments. Experts in 2021 tended to be negative when assessing Turkey’s framework conditions. While a 4.5 score on Entrepreneurial Finance placed it eighth among GEM Level B economies, Ease of Access to Entrepreneurial Finance received a score of 3.8, 13th overall in this group. In a climate of high inflation it is unsurprising that finding funding is difficult. It may be necessary for the state to further incentivize lending to entrepreneurs through their own programs, or by securing some loans made by the financial sector. Such actions could contribute to better experts’ assessments of government support for entrepreneurship. In 2021, all three of Turkey’s governance-related conditions received low scores compared to peers, reflecting the need for more visible policies targeted at entrepreneurs in the coming years.

Similarly, the government’s role in offering entrepreneurial education was also deemed to be insufficient. In particular, the condition Entrepreneurial Education Post-School received a 3.7 score, the third lowest among GEM Level B economies. This belies an otherwise strong reputation for a well-trained professional class in Turkey, which may be lacking in entrepreneurially focused training. However, the condition Ease of Entry: Market Dynamics received a 7.0 score, placing it first among GEM Level B economies and reflecting a consistent consumer market that can be accessed without excessive regulation. Yet, conversely, the condition Ease of Entry: Burdens and Regulation received a 3.8, 15th among GEM Level B economies, which means new businesses face strong and perhaps unfair competition when entering those markets.