Question

The different trade theories such as Heckscher-Ohlin- Samuelson, Rybczynski, Leontief, Baldwin, and Hicks emphasize factor intensity and reward/return to each factor and productivity. Using the Product Life Cycle as a point of reference, explain how these theories (at least 3) impacts developed or developing countries? NOTE: Agree or

Answer 1

generalisation/extension of SIOPRODUCT CYCLE MODEL (Upsc) brooduct cytte tech gap.. - It was fully developed by Vernon) in 1966 theoly ! According to this model, awhen a new product is introduced it usually requires highly skilled labor to produce. As the product matures and acquires mass acceptance, it becomes standardized e it can be produced by mass production techniques and less skilled lebar. Therefore, companitive advantage in the product shifts from the advanced nation that originally introduced it to less advanced nations where laba is relatively cheaper. e innovating nation → inmitating nation). so, hade can be said to be based on changes in relative factor abundance (tech.) among nation over time. * while the technological gap model emphasizes the time lag in the imitation process, the poduct cycle model stresses the standardization Buress * According to these models the most highly industrialized economies are expected to export non standardized products enbodying new & more advanced technologies and hupat products embodying old or less advanced technologies. * radio > Example & transistors > (produced in pinted circuits U'S Trade is based on in factor abundance (technology) amay immitated by Japan) nations over time) It explains the occauence of intra industry trade blo nations. In this case m technology as a new product design can change the pattern of imports and exports Innovating or high income counties export neweest veision of product to inmitating country and import older version of the product because of low cost production in immitating nations. product cycl ( can be supplemented with international dumping as well gets shortened, impacting the foreigu mkt etc.) Bo* (continued) The time from the Intw. of new product in the innovating nation to the time when the minating nation displaces the innovating country in thind markets and in the innovating country itself has become shater and shorter . " This leads to problem of the developed innovating nation which rely on new technologies & new products, to remain internationally competitive C in dependence over IP rights) The benefits that innovating nations can read from the ми new tech & new products are quickly copied by other counties Scanned so they have to hun fastend faste simply to avoid CamScartelling behind. Reason: Perfect mobility of info., tech, RID across nations eg 59 etc.

RADE BASED ON DYNAMIC TECHNOLOGICAL DIFFERENCES → Relaxing assumption - Technology Gap : Posner) 1961 · 19602 of 4-0 model → Product Cycle Vernon 1966 we au taking 2 types of countries innovating e immitating. . of constant tech New Product Phase Product Growth Phas Matuity Product Phase Product Decline phase Price competition (Immitator getting advantage) JINNOVATOR COUNTRY from immitator Cubus Exports Consumption Jabats (.doc) - tu pood" Expas it Production (dominic) pood" monebaly is then libolle doncestie l about Time Product completely - standarded Product becomes & Steudodije to underselling → I MMITATOR COUNTRY outs Production шH from internatiod marked Consumption, it helling Prod"> cons' ie expats i (domestic) demand fuelling Imports L o I À I $ D C D I The me at there OA in Istage I, product is produced of consumed only in the innovating country. on stage I), at time AB, production is increased in the innovating country and increases rapidly to accomodete reing demand at home an abroad. ( no forrige production, county has a pleas morge on stage product becomes standardined and the Prinovating Started with CamScanner

I & I ham nay find it brofitable to licenst other domestic & foreign ams to also manufacture the product (inmitating county starts producing the product for domestic consumption) on stage 1 time CD, innitating country factug lowe labas other costs now that the product has been standardized a no longer require der. d engineering skills, starts uneleiselling in thind markets & production of product in innovating nation falls. Bu stage v/ E past point D), inmitating country starts undeselling the innovating country in the latter market as well t... production of the product in the innovating country declines fffffffff - rapidly in a 7 Technological dit fusion, standardisation and lowet costs abroad this bing the end of life cycle of the puoduct. l it is the time while the - Exceptions: Brand I taste loyality , Patents/ copyorights Cinnovating canity to concentrate attention on new techudogical inovations & to introdud now froducts & weate a tech gap) en went years, Hu dilluon las el new technologies has skatened cores ideable, I so we haw withessed time compression of the broduct life cycle.on. TECHNOLOGICAL GAP (Dynamic extensions of static H o model) aka immutatiou 905 m | According to the technologial gap model sketched by Posne in 1961, a is ba great trade among deal of industrialized countures based on the Introduction of new products & (new production pwcases Then . the innovating firm e nation a temporany nowopoly in the world market which is often based on patents & copyrights (pranted to stimulate the flow of invertiary). I continuau inventions l innovation I gives rise to put rade despite hosting O Sanu teks in ratione for-e.g. u.s. expects a large number of high technology pwducts. However, a foreign produce acquires the new technology & eventually able to conquer markets abroad , even the u.s. market because of their lower labor costs. U.S. may have introduced still never producto e production processes it may be able to expect these products based on the new technological gap_established Gab blw abheanamu new healing Il rate of their subalikatus] - SHORTCOMING of this model is that size of it does not explain the technological geps & does not explou the technologial reason gaps that curse o exactly how they are eliminated over can never with