Multinationals and backward linkages in Polish agro-food production systems

The paper tests for the backward linkage hypothesis of multinational firms in developing host economies. The empirical case is the Polish food industry expected to be a highly relevant European case as the largest magnet of ‘developing-oriented’ FDI over the last decade. Combining the case study, descriptive and econometric evidence suggests that backward linkage creation has failed in terms of upstream high-technology suppliers in food machinery, but succeeded in low-technology linkages with Polish farmers. However, the latter effect only results for those multinational linkages from the food industry to agriculture involving firms of non-EU origin. This result confirms the proximity hypothesis about backward linkages and geographic distance as forwarded by Rodriguez-Clare (1996). However, it could also reflect the bias that the Common Agricultural Policy introduces on backward linkage creation in the Polish food industry.