Backward linkages in Costa Rica: The role of the linkages promotion agency. Evidence from 2001 to 2008

Linkages promotion agencies are institutions responsible for encouraging and promoting the backward linkages between multinationals and local suppliers. They are catalogued as productive development policy (PDPs). PDPs should help local firms to increase value and productivity due improving the quality of the national business climate. In Costa Rica there was little evidence in terms of econometrics evidence on the analysis played by Costa Rican linkages promotion agency named Costa Rica Provee (CRP) on the development of backward linkages. The objective of this document is to present new empirical evidence as to whether or not CRP has helped to develop backward linkages among high-tech multinationals (HT-MNCs) and local firms. It evaluates the relation of being part of CRP in general terms and having achieved backward linkages with higher asset specificity involved. By using the MNC as subject of study, I perform OLS and Logit regressions. The data comes from a panel of 94 HT-MNCs from the 2001 to 2008. The empirical results do not provide robust evidence of a positive effect of CRP on the generation of backward linkages among the HT-MNCs and local suppliers.