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THE PRODUCT CYCLE HYPOTHESIS IN A NEW INTERNATIONAL ENVIRONMENT

THE PRODUCT CYCLE HYPOTHESIS IN A NEW INTERNATIONAL ENVIRONMENT hypotheses has been changing. Two reasons account for that change: one, an increase in the geographical reach of many of the enterprises that are involved in the introduction of new products, a consequence of their having established many overseas subsidiaries; the other, a change in the national markets of the advanced industrialized countries, which has reduced some of the differences that had previously existed between such markets. A Word on Theory The fact that new products constantly appear, then mature, and eventually die has always fitted awkwardly into the mainstream theories of international trade and international investment. Hume, Ricardo, Marshall, Ohlin, Williams, and others have observed the phenomenon in passing, without attempting any rigorous formulation of its implications for international trade and investment theory. In the past decade or two, however, numerous efforts have been made to fill the gap. Some have dealt mainly with the trade aspects of the phenomenon.' But some have pushed beyond the immediate trade effects, tracing out a pattern that eventually culminated in foreign direct investments on the part of the innovating firm.2 According to the product cycle hypothesis, firms that set up foreign producing facilities characteristically do so in reliance on some http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Oxford Bulletin of Economics & Statistics Wiley

THE PRODUCT CYCLE HYPOTHESIS IN A NEW INTERNATIONAL ENVIRONMENT

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Publisher
Wiley
Copyright
© 1979 Blackwell Publishing Ltd
ISSN
0305-9049
eISSN
1468-0084
DOI
10.1111/j.1468-0084.1979.mp41004002.x
Publisher site
See Article on Publisher Site

Abstract

hypotheses has been changing. Two reasons account for that change: one, an increase in the geographical reach of many of the enterprises that are involved in the introduction of new products, a consequence of their having established many overseas subsidiaries; the other, a change in the national markets of the advanced industrialized countries, which has reduced some of the differences that had previously existed between such markets. A Word on Theory The fact that new products constantly appear, then mature, and eventually die has always fitted awkwardly into the mainstream theories of international trade and international investment. Hume, Ricardo, Marshall, Ohlin, Williams, and others have observed the phenomenon in passing, without attempting any rigorous formulation of its implications for international trade and investment theory. In the past decade or two, however, numerous efforts have been made to fill the gap. Some have dealt mainly with the trade aspects of the phenomenon.' But some have pushed beyond the immediate trade effects, tracing out a pattern that eventually culminated in foreign direct investments on the part of the innovating firm.2 According to the product cycle hypothesis, firms that set up foreign producing facilities characteristically do so in reliance on some

Journal

Oxford Bulletin of Economics & StatisticsWiley

Published: Nov 1, 1979

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