This note provides the theoretical background to looking at Transnational Corporations (TNC)-Small and Medium-Sized Enterprises (SME) linkages. Section 3 considers the role of industrial policy, trade policy and donor agencies and international organisations in TNC-SME linkage creation. Section 4 provides some evidence on linkage creation. Section 5 provides some examples and challenges in linkage promotion. Section 6 concludes with a proposal for the establishment of a fund for linkage creation to enhance the development dimension of agreements on investment.