Multinationals and backward linkages in Polish

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.