Youth Entrepreneurship: A Policy Priority for Western Balkan Economic Recovery

Written by Geena Whiteman, Head of Youth Employment Working Group

Key Points

• The COVID-19 pandemic has had a disproportionately detrimental impact on young people’s employability in the Western Balkan region.
• The current environment is disincentivizing young people pursuing entrepreneurship, despite entrepreneurship being considered one of the most important tools for economic recovery and growth. 
• Implementing a ‘Youth Guarantee’ that prioritises youth entrepreneurship is the best solution to combating the youth unemployment crisis in the region, whilst also stimulating the economy and increasing market competitiveness.  

Introduction

The ongoing COVID-19 pandemic has hit the youngest generations the hardest, with the closure of schools and many youth-dominated workplaces resulting in a generation of young people ‘left behind’ in the COVID-19 response (Kukreja 2020). The subsequent job losses from the  pandemic have disproportionately affected women and young people, with overall regional youth unemployment rising to 37.7% in 2021 – a 5.4% point increase from June 2020.   Linda Van Gelder (World Bank Country Director for the Western Balkans) has argued that the post-COVID Western Balkan policy approach must prioritise job creation and economic transformation, with an emphasis on green transition and digitalisation, in order to close the gap between the Western Balkans and other European countries and aid them in their accession into the European Union. With a growing number of young people out of work, the regional response needs to prioritise the development of entrepreneurial skills and knowledge, emphasising digital skills and sustainability, to aid in reducing youth unemployment through youth job creation and contribute to the recovery of the region. 

Youth Entrepreneurship – What and Why?

Entrepreneurship refers to the process of planning, launching, owning, and operating a small to medium-sized enterprise (SME) that offers either a process, a product, or a service. Key characteristics of entrepreneurial activity are the capacity and ability to launch, organize and manage a business activity with the intent of making a profit. To be considered an entrepreneurship, some key characteristics are considered to be the willingness and ability to take calculated risks and other personal attributes such as persuasion, initiative, problem-solving, independence, and creativity.

The definition of youth varies depending upon the regional context and the organisation defining it, however, the common consensus for the definition of a young entrepreneur in the European context is a young person between the ages of 18 and 30 that are either in the process of starting up their own business or are currently running their own business. Young people pursue entrepreneurship due to a variety of factors, such as: coming from an entrepreneurial family or peer group, seeking to create their own employment rather than work for someone else, in pursuit of a supplementary income or in pursuit of financial freedom or independence. The growth of awareness about entrepreneurship, particularly in discussions on social media and through the increasing presence of youth business incubators and non-formal education providers, has led to an increasing interest in entrepreneurship as a viable long-term career option. For young people in regions such as the Western Balkans that are categorised by sluggish economic growth and stagnant labour markets, youth entrepreneurship is seen as a lifeline for the successful labour market integration of young people – particularly for those from vulnerable or marginalised backgrounds who may face more barriers to entering formal employment.

Barriers to Youth Entrepreneurship 

Young people across the Western Balkans are apprehensive about pursuing entrepreneurship, with the most common reasons for this apprehension being a fear of failure, lack of perceived skills and experience, lack of business network and connections, lack of access to start-up capital, and complex administrative procedures (Rovčanin 2019). In comparison to their northern neighbours in the Danube Valley, dubbed the Silicon Valley of Central Europe, the Western Balkans are perceived to have a lower level of ‘entrepreneurial spirit’, signified by differences between entrepreneurial intentions and entrepreneurial actions of young people across the region (Predojevic-Despic et al 2016). There is a growing number of entrepreneurship-oriented projects across the Western Balkans, including a growing presence of youth enterprise-oriented organisations such as the World Summit awards and Regional Incubator for Social Entrepreneurs (RISE), as well as a growing amount of business incubators targeting younger entrepreneurs, such as the Innovation Centre Kosovo (ICK) or The Mozaik Foundation in Bosnia and Herzegovina. Engagement with these organisations provides young people with access to training courses and programs designed to upskill them into entrepreneurship, as well as increase their professional network, however, many of these incubators are centred in bigger cities, thus leaving young people outside of the main cities without access to such resources and support (Gribben 2018). Whilst all Western Balkan countries governments provide some form of financial incentives for young people launching and running their businesses, the provision of alternative funding types are still not legally recognised, and therefore, relatively underdeveloped. Most financial support for young entrepreneurships derives from international non-government and government organisations and agencies, who often cooperate with domestic governments on special projects focused on the development of youth entrepreneurship for the economy (Culkin and Simmons 2018). There are many regulations surrounding entrepreneurship and self-employment, and information regarding these regulations is often conflicting, difficult to access, and often passed informally amongst entrepreneurial networks and mentorship (Gribben 2018). 

Youth Guarantee and the Western Balkans

The reinforced Youth Guarantee is a commitment by all EU countries to ensure that all young people under the age of thirty receive a good quality provision of employment, continued education, apprenticeship, or traineeship within four months of becoming unemployment or finishing education. Under the framework of the Youth Guarantee, there is an emphasis on the promotion of youth entrepreneurship as an alternative to formal employment, which highlights the importance of improving access to entrepreneurship education and skills development, improving access to start-up financing for young entrepreneurs, improving and developing young entrepreneur networks and providing mentoring and coaching opportunities for young entrepreneurs. Whilst progress of this framework varies across member state based upon individual country priorities and capacity to deliver on each of these, the use of a unifying framework has aided in the development of a more youth friendly entrepreneurial ecosystem across the EU, allowing for the further promotion and development of youth entrepreneurship. 

Policy Recommendations

Whilst the current youth entrepreneurship approach across the Western Balkans is highly fragmented, the adoption of a universal approach to youth entrepreneurship would aid the region in building back better, which could ultimately result in combating the youth unemployment crisis in the region, whilst also stimulating the economy and increasing market competitiveness. A more universal approach to youth entrepreneurship could adopt the following recommendations:

A digital toolbox for young entrepreneurs that provides a clear and comprehensive database of relevant information for starting a business, including administrative duties, financial guidance, and regulatory advice. 

Improved provision and access to entrepreneurship education and training, focused outside of main cities and in rural areas to better engage rural young entrepreneurs and enable them to start their own business within their local area.

Increased opportunities for start-up financing, such as through the provision of concessionary lending to young start-ups, and clearer legal environment surrounding alternative financing sources such as angel investors. 

In 2020, the Director of the European Bank of Reconstruction and Development argued that  “We need to address the whole ecosystem to support young entrepreneurs, an issue we have been promoting for a long time in the region.” Therefore, for the post-COVID19 recovery, it’s time for the Western Balkans to emphasis youth entrepreneurship as a key tool for building back better, focusing on access to opportunity and enhanced skills training for young people to boost the entrepreneurial mindset of the region. 

References

Culkin, N. & Simmons, R., 2018. Meeting the challenges that hinder entrepreneurial development in the Western Balkans small firm sector, Hertfordshire: British Council.

European Training Foundation, 2020. Young entrepreneurs key to the future in the Western Balkans and Turkey. Available at https://www.etf.europa.eu/en/news-and-events/news/young-entrepreneurs-key-future-western-balkans-and-turkey [Accessed 03.12.2021]

Duell, N., 2018. Employment and entrepreneurship under the Youth Guarantee Experience from the Ground, European Commission, Luxembourg

Gribben, A., 2018. Tackling policy frustrations to youth entrepreneurship in the Western Balkans. Small Enterprise Research, 25(2), pp. 183-191.

Kukreja, P., 2020. The G20 in a Post-COVID-19 World: Bridging the Skills Gaps, ORF Issue Brief No. 424, Observer Research Foundation

Predojevic-Despic, J., Pavlov, T., Milutinovic, S. & Balli, B., 2016. Transnational Entrepreneurs in the Western Balkans: A Comparative Study of Serbian and Albanian Migrants and Returnees. In: R. Nadler, Z. Kovács, B. Glorius & T. Lang, eds. Return Migration and Regional Development in Europe. London: Palgrave Macmillan, pp. 111-127.

Rovčanin, A., 2019. Regional Report on Enabling Environment for Youth Entrepreneurship in the Western Balkans, Belgrade: Belgrade Open School.