Multinationals and backward linkages in Polish agro-food production systems

The paper tests for thé backward linkage hypothesis of multinational firms in developing host economies. The empirical case is the Polish food industry which is expected to be a highly relevant European case as the largest magnet of FD1 in the accession countries 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. The concluding discussion suggests that Poland’s accession to the EU may push multinational firms to forge more local linkages even though there can also be negative effects.