A analyzing thepotential exportability of his products and,

A Product Life Cyclefor International Trade?LOUIS T. WELLS, JR.Many products follow apredictable pattern in internationaltrade.

Understandingthe international productlife cycle may lead toimproved policies resultingin increased exports and areduction in the effectivenessof import competition.Journal of Marketing. VoL 32 (July,1968), pp. 1-6.lowering of barriers to international trade has resultedin many opportunities for American companies to profit fromexports.

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Clearly, the businessman needs ways of analyzing thepotential exportability of his products and, equally important, toolsfor predicting which products are likely to be threatened by importcompetition.Until recently, the manager was dependent on the explanationsof trade offered by the classical and neo-classical economists. Theirreasoning generally led to the conclusion that each country willconcentrate on exporting those products which make the most useof the country’s abundant production factors. The economic theoryis elegant—it can be stated mathematically or geometrically and itcan be manipulated to yield, under certain assumptions, answersto questions such as what is the value of free trade to a country,or what are the costs and benefits of certain restrictions. So longas the problems posed are of a very broad nature, the theory providesa useful way of analyzing them. However, when the theoryis applied to the detailed problems facing the businessman it becomesof limited value.

The Trade Cycle ModelA new approach to international trade which appears most promisingin aiding the business executive is closely related to the productlife cycle concept in marketing. The model claims that many productsgo through a trade cycle,^ during which the United States is initiallyan exporter, then loses its export markets and may finallybecome an importer of the product. Empirical studies of trade insynthetic materials,- electronic products,^ office machinery,^ consumerdurables,^ and motion pictures^ have demonstrated that these1 For a more complete theoretical support of a similar model, seeRaymond Vernon, “International Investment and International Tradein the Product Cycle,” Qiuirterly Journal of Economics, Vol. LXXX(May, 1966), pp. 190-207.2 Gary C.

Hufbauer, Synthetic Materials and the Theory of InternationalTrade {Cambridge: Harvard University Press, 1966).3 Seev Hirsch, Location of Industry and International Competitiveness(Oxford: Clarendon Press, 1967).•* U. S. Senate, Interstate and Foreign Commerce Committee, Hearingson Foreign Commerce, 1960, pp. 130-139.5 Louis T.

Wells, Jr., Product Innovation and Directions of InternationalTrade, unpublished doctoral thesis (Harvard Business School,1966).6 Gorden K. Douglass, Product Variation and Trade in Motion Pictures,unpublished doctoral thesis (Department of Economics, MassachusettsInstitute of Technology, 1963).

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