2023 POLICY ROADMAP

In 2023, Croatia’s GDP per capita was increasing slightly, and unemployment falling (to around 7%), but Croatia had one of the highest inflation rates in the Eurozone at just under 9%. High inflation was constraining consumption and reducing the competitiveness of Croatia’s goods and services in international markets.

The Croatian government was continuing to subsidize energy for SMEs, which may have had unintended consequences for their competitiveness. Since 2021, the Croatian Chamber of Economy has been surveying the readiness of Croatian SMEs for the green transition. The findings from 2021, when 60% of surveyed businesses did not see the green transition as a business opportunity, warned policymakers and financial and educational institutions of the need for regulatory interventions, better access to finance for such projects, and more educational support for developing new knowledge and skills.1

2023 Framework Conditions Review2

The assessed overall quality of the Croatian entrepreneurial environment continues to improve..
In 2019, Croatia had had a National Entrepreneurial Context Index (NECI) score of 3.6, ranking it 50th of 54 economies. By 2022, this score had increased to 4.1, with Croatia ranked 39th of 51 economies. In 2023, it improved slightly, to a score of 4.3 and a rank of 32nd of 49.

In 2023, just two of Croatia’s Entrepreneurial Framework Conditions (EFCs) were scored as sufficient or better: Ease of Entry: Market Dynamics and Physical Infrastructure. However, eight EFCs improved their scores from 2022, usually not by much, with the largest increase being for Government Policy: Taxes and Bureaucracy (from 3.7 to 4.3). Four EFCs had lower scores, again not by much. The score for Entrepreneurial Education at School remained unchanged, with a lowly 2.9, once more the worst of all Croatia’s framework scores.

Additional questions in 2023 saw national experts assessing the quality of Croatia’s social support for women entrepreneurs, and those women entrepreneurs’ access to resources relative to men. For social support, Croatia scored just 3.4, ranking it 32nd. Women entrepreneurs’ relative access to resources in Croatia fared a little better, with a score of 4.8 and a rank of 34th.

2023 Entrepreneurial Activity Review

In the Adult Population Survey (APS), less that one in five adults in Croatia reported that their household income had fallen in 2023, the lowest proportion of the 45 economies in the GEM APS, as it had been the year before.

Entrepreneurship enjoys a high public profile in Croatia, with seven out of 10 adults knowing someone who had recently started their own business, up from the year before, and second highest in Level B and fifth highest in GEM. A bit less than four out of five adults considered themselves to have the skills and experience to be able to start their own business, and more than three in five saw good opportunities to do so locally. However, one in two of those seeing good opportunities would not start a business for fear it might fail. Despite this, nearly one in five of those adults not already doing so expected to start their own business within the next five years.

In 2023, just over one in eight adults in Croatia was already starting or running a new business, a proportion that had been more or less the same for the previous two years. Perhaps reflecting the lack of social support noted earlier, women were much less likely to be starting a business than men, with more than three new businesses started by men for every two started by women. While the level of Established Business Ownership was low, at around one in 20 adults, this was an improvement from the year before.

Three in five new entrepreneurs agreed with the motivation to earn a living because jobs are scarce, and nearly one in two had customers beyond Croatia. A similar proportion expected to use more digital technologies in the next six months. Around one in five anticipated employing another six or more people over the next five years, despite 45% being solo entrepreneurs (one owner and no employees).
 

1  In 2023, the GEM Croatia team in collaboration with GEM Slovenia (and with contributions from GEM Spain and GEM Brazil) published Entrepreneurship and Well-being: Exploring the UN Sustainable Development Goals through the Lenses of GEM and Other Indicators (Sustainable Development Goals Series; Palgrave Macmillan, 2023).

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