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international product cycle

Page history last edited by PBworks 15 years, 5 months ago

 

International Product Cycle Theory

 

 

If you look at the state of trade in the world economy today, you will see that most trade is actually between the developed nations (between the US and EU, for example). 

 

So, comparative advantage does not really explain this trade between very similar countries.  Almost all of this trade of manufactured goods is not based on cost, but is rather based on desires to find new markets for products.   

 

In this model of the international product cycle, we see that trade is more determined by factors such as technology, wealth of consumers, and size of markets.  

 

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