In our time, scientific and technological progress is increasingly affecting international trade. In the distribution of the national product of the industrialized countries, there is a growing proportion of those who develop more and more complex innovations and those who are qualified enough to apply them in production. This trend is reflected in international trade. Studying how technological progress is gradually becoming the dominant factor in international trade pushes the boundaries and at the same time challenges the simplistic version of the factor ratio theory.

However, scientific and technological progress can be viewed as changes in the provision of factors of production. A new technology that makes production cheaper is equivalent to an increase in production capacity. Scientific and technological progress is the growth of the potential of knowledge - a factor of production, the benefit of which is in the income from the sale of patents, licenses, know-how, and other forms of expert documents. To the extent that new methods of production (or management) increase the productivity of labor, capital, land, they can be seen as a corresponding expansion of the supply of these factors.

The approach to technology as a factor of production, which gives factor income, expands the scope of the Heckscher-Ohlin theory, which considers the availability of factors and differences in the intensity of their use as key points for explaining the structure of international trade. Accounting for scientific and technological progress makes it possible to identify patterns of changes in the structure of international trade, which the Heckscher-Ohlin static model cannot do.

In 1961, the Englishman M. Pozner (G. Pozner) proposed the Theory of Technological Gap, which is a special partial view of the Heckscher-Ohlin theory with an additional technological factor introduced into it. The central point of Posner's theory is that international trade is caused by technical innovations that occur first in some industry in one of the countries that trade. As a result, the exchange of equipment and technology is asymmetric. The country-innovator has a temporary quasi-monopoly on the production of products (new or at lower cost) and exports it by importing non-science products. Over time, the technological gap is reduced due to technology transfer, import substitution, the introduction of alternative technologies in backward countries.

A simplification and, consequently, a disadvantage of the technology gap theory is that it does not take into account the deliberate restriction of access to new technologies on the part of the owner. Proposed in 1966 by Raymond Vernon, the International Product Life Cycle Theory takes into account the unrealistic idea of ​​the universal availability of any (including new) technology for every manufacturer in any country. This theory reflected the reality of the 60s, when products developed for the American market began to gradually spread to other countries.

International Product Life Cycle Theory states that some products go through a cycle of four stages - introduction, growth, maturity, and decline; production of these products moves from country to country depending on the stage of the cycle.

The change in the main parameters characterizing the stages of the product life cycle is given in Table. 1.5.11.

At the first stage (implementation), innovations are developed in response to the need. As a rule, the main role here belongs to the industrialized countries (IDCs). Certain reasons explain the leading role of the PKK:

1) high incomes, allowing you to risk money during research, the result of which is known in advance;

2) high competition;

3) demanding consumers with a high level of education, qualifications, income;

4) availability of scientists, qualified engineers, modern equipment, technologies.

Once a product is developed, it still needs to be improved, and so production is typically located in the countries where the product was developed, or other countries with similar living standards, although in theory a product could be made anywhere in the world.

Since a new product is developed and released in response to internal rather than external needs, most sales during the introduction period are made in the domestic market, and only a small part of the products are sold to consumers in other countries with similar market segments. These are usually high-income countries because economically new goods are classified as luxury goods.

At this stage, the manufacturing process is more practical than at subsequent stages. The products are not yet standardized, produced by a process that makes it possible to quickly change the characteristics of the product in accordance with the feedback of market information. This increases labor costs compared to automated production, which is more capital intensive. The major equipment required for high volume production is developed later than the principal technology, because at this stage of the sales growth it may be too uncertain to warrant compensation for the high costs of developing new equipment.

The fact that the US is ahead of other countries in the production of new products that require manufacturing processes helps to understand the Leontief paradox, which explains why the US exports mainly manufacturing products, although it has an excess of not labor, but capital.

The US has export advantages in those manufacturing industries where manufacturing workers are paid the highest (space industry), but less in industries with lower wage rates ( clothes industry). This is due to the fact that the level of education and skills of American workers ensures the efficiency of their work in not yet standardized production; when manufacturing becomes highly automated, the American workforce becomes less competitive (through high costs) because unskilled (and cheaper) workers can quickly and efficiently complete the required tasks (see Table 1.5.11).

At the second stage (growth), the country of innovation, in parallel with the domestic production of a new product, can start its production abroad. In addition, a foreign competitor can also start production of the same product, and he can do this with the help of minor changes in the product, bypassing patent protection or acquiring some expert documents. But in any case, the manufactured products almost completely remain in the country where the new enterprise is created. This is explained by:

1) the market for new goods is expanding in this country;

2) unique product modifications are introduced for local consumers;

3) local costs can be significant due to the difficulties associated with starting production;

4) significant transport costs;

5) high tariffs.

As sales increase in many markets, the prerequisites for a unified process and equipment are emerging. To a certain extent, this is hindered by numerous modifications made by competitors. The manufacturing process is still pratsemic.

In the third stage (maturity), global demand for a new product begins to level off. The idea and technology for the production of a new product become so mature that additional knowledge is no longer necessary to reduce costs. The product becomes more familiar and standardized, so its production in a country with a high level of technology (HTC) becomes meaningless.

The production of goods is moved to other countries, which can use standard technology already, reducing the unit cost of production. Lower cost makes it possible to increase sales in underdeveloped countries (LDCs).

Finally, at the fourth stage (decline), technology and equipment are so improved that special skills are no longer needed for the production of goods, and therefore it is moved to SRKs, which have an excess of cheap labor. Markets in the RHK are shrinking faster than in the RHK because wealthy consumers in the RHK spend their income on new goods that are just beginning to be produced there . Market and cost factors make it necessary to satisfy the necessary needs of consumers of the RRC in a mature product by importing it from the RRC.

On fig. 1.5.13 shows the expected patterns of foreign trade in a new product during its life cycle.

Rice. 1.5.13. Patterns of foreign trade in a new product during its life cycle

In the early stages of the introduction of a new product into production, for example, it begins in the United States (an invention can be made anywhere; the primacy in commercial production matters). At time t 0 , the US starts exporting some of this good to other PKKs. After some time, these countries themselves master its production, possibly through foreign affiliates created by American manufacturers. Such a move of production abroad is quite possible due to the magnificent loss of the initial technological advantage by the Americans. This is very beneficial for the many new manufacturers of a new product, who are adopting an ever simpler and more standardized technology. Increasing the output, other RKs (Canada, Europe and Japan) at the moment t 3 become net exporters of this good. As production technologies age and standardize, the US finally loses its comparative advantage and becomes a net exporter at time t 4 . It can be assumed that over time, other countries will catch up with Canada, Europe and Japan in mastering this already outdated technology. At the moment t 5 the product life cycle enters the final stage, in particular with regard to foreign trade: it is exported to the USA and other RKs SRKs or newly industrialized countries. The production of an obsolete product is carried out in the less developed countries in that sooner or later their advantages associated with cheap labor will prevail over the backlog (and it is decreasing) in the technical level, which will allow them to export this product on the basis of comparative advantage.

The advantages of the theory of the international life cycle of a product lie in the fact that it explains the patterns of development of foreign trade in a large group of goods, including synthetic materials, canned goods (in Argentina and Brazil), cotton fabrics and products (Pakistan, India), leather and rubber products, paper, electronics, technologically complex goods, petroleum products, office equipment.

Disadvantages of this theory:

1. There are many types of products that do not go through all stages of the life cycle. Such goods include goods with a very short life cycle, which makes it impossible to reduce costs by moving production from one country to another; luxury goods, the cost of which does not matter to consumers; goods with such high transport costs that their export is impractical, regardless of the stage of the life cycle; products for which a differentiation strategy is applied in order to support consumer demand without the use of price competition.

2. The theory secured the leadership of the United States, since they had already won it. This made futile attempts by the IRC to achieve changes in its condition in the international division of labor. Important roles were assigned to the countries of Europe and Japan.

The theory does not apply to the products of TNCs. TNCs tend to introduce new products almost simultaneously at home and abroad as they move from a diversified domestic strategy to a global strategy. At the same time, TNCs exclude advances and lags that occur during the movement of goods from one country to another. In addition, TNCs are increasingly producing abroad simply to take advantage of savings in production, rather than in response to the growth of foreign markets.

conclusions

1. The international product life cycle theory states that many new products will first be produced in the countries where these products were studied and developed. It is almost always PRK, with the US recently accounting for a significant share, although Japan and Germany have been able to overtake the US in specializing in certain types of products.

2. During the life cycle of a product, which consists of four stages (introduction, growth, maturity and decline), production tends to be more capital intensive and moves to other countries.

3. The theory does not apply to some groups of goods and almost all products of TNCs.

4. The international product life cycle theory only states that when and if R&D ceases to be a decisive factor in comparative advantage, production will move to countries that have a comparative advantage in other cost elements, such as unskilled labour.

The author of the first version of the theory of the "product life cycle" was a professor at Harvard University R. Vernon. According to R. Vernon, a new product went through a cycle consisting of several stages, or stages - introduction, rapid growth, slowdown, expansion, maturity and aging.

In the first stage, a new product is produced in small batches. Its technological development takes place in industries and countries that are at the forefront in the field of scientific and technical progress. The manufacture of a new product requires a large amount of skilled labor than the mass production of standard goods. A new product is sold at the first stage mainly in the domestic market of the country where it was created.

At the second stage, there is a great demand for new products abroad and their production is being established in other countries. As a rule, movement goes from developed to less developed countries. Vernon argues that this process is directed from the United States to Western Europe and Japan, which are significantly inferior in terms of spending on scientific research, in terms of the number of scientists and engineers.

At the stage of maturity, the cost of improving the product is reduced, the number of competing similar products increases, and international trade in them reaches a peak. Demand for them is maintained mainly only by lowering prices, which inevitably leads to increased attention in the cost of labor. In this regard, production begins to move to developing countries.

Finally, at the fourth stage, the product ceases to be new, it becomes old, its production begins to decline, because. does not bring any more profit, and disappears from the market.

This model has many obvious shortcomings. Although the production of new goods provides certain advantages, allows you to receive high monopoly profits, but this monopoly is temporary, i.e. it is not about "use of knowledge". The model does not give an idea to what extent the duration of the cycle stages can fluctuate, whether it is measured in years or several decades. “The life cycle of products such as Scotch whiskey, Italian vermouth, French perfumes has been going on for centuries,” notes the American magazine Harvard Business Review. The sequence of technology transfer from the USA to Western European countries and then to developing countries is not necessarily observed. Received the development and reverse transfer of technological innovations through transnational corporations with laboratories in developing countries.

It is not true that the movement of the cycle begins with the US: they are no longer the only innovator in the release of new products. For example, the VCR was invented by the Dutch firm Philips and the Japanese firms Sony and Matsushita.

The theory of R. Vernon and its application in practice. Completed by: List E.S.

Theory of the product life cycle.

It was proposed in 1966 by the American economist R.
Vernon.
Theory explains the development of world trade
finished products based on their life stages.
A life stage is a period of time during
which the product has a pot life for
market and ensures the achievement of the seller's goals.
To explain international trade, he
used the microeconomic concept
product life cycle.

The product life cycle covers 3 stages:

Implementation. At this stage, the development of a new
product. The cost of launching a new product is high
highly skilled workforce, production is
small-scale character, competition is very insignificant.
Only a small part of the product goes to the foreign market.
Maturity. Issue becomes serial, decrease
the cost of production of goods and its price. A country
innovation is no longer competitive advantage.
Standardization. Initially, international demand is covered
by exporting goods from the innovator country, but then, as
how the release technology is standardized and disappears
need to use expensive
highly skilled workforce, development of output
begins in other countries, and the export of goods from the country of the innovator begins to decline.

Vernon's theory presents a dynamic model
international trade, the commodity structure of which
changes over time as goods pass
different stages of their life cycles.
According to Vernon, the United States, due to its capabilities
can produce new products and be an innovator. Then Western
Europe, and only towards the middle of the product life cycle
developing countries join the release.
Vernon's theory shows that a country can
use your comparative advantage
as long as he owns know-how, technologies that are inaccessible
for manufacturers from other countries. But diffusion
technologies, product standardization and lower
spending abroad drives displacement
comparative advantage from an innovator country to
imitator country.

Based on the stages of the product life cycle,
to explain modern trade links between
countries, at least when exchanging ready-made
products.
Involvement in the theory of LCT of the international aspect
predetermines the lengthening of the life cycle
products, clearly explains
foreign trade with technologically sophisticated
products.

Using the theory of the international product life cycle

In marketing to characterize the level change
demand for a product, the curve is used
life cycle of demand (technology). In accordance with
life cycle theory, cyclic changes during
time of any need and its characteristics,
as, for example, the volume of consumption (sales) of any
values, go through the stages of the life cycle.
The originality of the concept of regional life
cycle is reduced to the fact that it combines
elements of the international economy and marketing
theory, which is characterized by a life curve
product cycle.
According to the product life cycle theory, countries can
specialize in the production of goods, but
different stages of their maturity. This theory was later
supplemented by the concept of innovation.

Questions:

1. 3 stages of the product life cycle according to R. Vernon.
2. What is a "life stage"?
3. What country did Vernon consider as an innovator and why?
4. When can a country use its
comparative advantage?
5. What causes the transition of the comparative
benefits from an innovator country to a mimic country?

10. Put the stages of the LC in the correct order:

a) Stage of maturity
b) Standardization stage
c) Implementation stage

11. To explain international trade, Vernon used the ____ concept of the product life cycle.

a) macroeconomic
b) static
c) dynamic
d) Microeconomic

12. What stage does the following belong to: "reducing the cost of production of goods and its price":

a) Stage of maturity
b) Standardization stage
c) Recession stage
d) Implementation stage

13. Vernon's theory is a ______________ model of international trade:

a) static
b) Dynamic
c) macroeconomic
d) Microeconomic

14. Possession of technologies inaccessible to other countries is:

a) absolute advantage
b) Relative advantage
c) Comparative advantage

In the middle of the 1060s. American economist R. Vernon put forward the theory of the product life cycle, in which he tried to explain the development of world trade in finished products on the basis of life stages, i.e.

The period of time during which the product has viability in the market and ensures the achievement of the goals of sellers.

The main stages of the product life cycle:

1. The creation phase - the development of a product innovation in response to

emerging demand within the country. At this stage, the production of a new product is small-scale, requires highly skilled workers and is concentrated in the country of innovation (usually an industrialized country), and the manufacturer occupies an almost monopoly position, only a small part of the product enters the foreign market.

2. Growth phase - satisfaction of the emerging need for a commodity

innovation outside the country. The product becomes more standardized, competition between manufacturers increases and exports expand.

3. Maturity phase - full satisfaction of the need for a commodity

innovation both inside and outside the country. Here, large-scale production prevails, the price factor becomes dominant in the competitive struggle, and as markets expand and technologies spread, the country of innovation no longer has competitive advantages. The shift of production to developing countries begins, where cheap labor can be effectively used in standardized production processes.

4. Saturation phase - reduction in sales of a product innovation for

outside the country.

5. The phase of decline - the rejection of the product innovation by the developing country and the satisfaction of the existing need through imports.

The main feature of the product life cycle:

How many types of products, so many different types of life cycle;

Each stage of the product life cycle has its own characteristics.

Functioning conditions: maintaining the life of the product through its current improvements until the time of approval of future product innovations; transfer of the potential of international trade to future product innovations at the stage of growth of international trade.

The product life cycle theory quite realistically reflects the evolution of many industries, but it does not comprehensively explain the trends in the development of international trade. There are many products (short life cycles, high transportation costs, high quality differentiation, narrow target audiences, etc.) that do not fit into life cycle theory.

Thus, this model has many obvious shortcomings. Although the production of new goods provides certain advantages, allows you to get monopoly high profits, but this monopoly is temporary and is not associated with the concentration of production or capital, but with the use of new scientific developments. The model does not give an idea to what extent the duration of the cycle stages can fluctuate.

vernon trade demand competitive

The changes that took place in the development of the world economy and international trade in the second half of the 20th century did not refute the main provisions of the classical theory. Meanwhile, a number of facts that have developed in recent decades have led to the emergence of new theories that reflect the realities of the current stage of economic and technological development of the world community. An additional impetus to the development of modern theories of international trade was made by the achievements of such leading economic sciences of the 20th century as management and marketing.

Technological gap model

Proponents of the neo-technological direction tried to explain the structure of international trade by technological factors. The main advantages are associated with the monopoly position of the innovator firm. A new optimal strategy for firms: to produce not what is relatively cheaper, but what everyone needs, but which no one can produce yet. As soon as this technology can be mastered by others - to produce something new.

The attitude towards the state has also changed. According to the Heckscher-Ohlin model, the task of the state is not to interfere with firms. Economists of the neo-technological direction believe that the state should support the production of high-tech export goods and not interfere with the curtailment of obsolete industries.

The most popular model is the technology gap model. Its foundations were laid in 1961 in the work of the English economist M. Posner. Later, the model was developed in the works of R. Vernon, R. Findley, E. Mansfield.

Trade between countries can be driven by technological changes occurring in one industry in one of the trading countries. This country is gaining a comparative advantage: new technology makes it possible to produce goods at low cost. If a new product is created, then the innovator firm has a quasi-monopoly for a certain time, i.e. earns additional profit.

As a result of technical innovations, a technological gap has formed between countries. This gap will be gradually bridged as other countries will begin to copy the innovation of the innovator country. Posner introduces the notion of a “stream of innovation” that occurs over time in different industries and different countries to explain the constantly existing international trade.

Both trading countries benefit from the innovation. As new technology , the less developed country continues to benefit, while the more developed country loses its advantage. Thus, international trade exists even with the same endowment of countries with factors of production.

Product life cycle theory

In the mid 60s. In the 20th century, the American economist R. Vernon put forward the theory of the product life cycle, in which he tried to explain the development of world trade in finished products based on the stages of their life. The life stage is the period of time during which the product has viability in the market and ensures the achievement of the seller's goals.

The product life cycle covers 4 stages:

• 1. Implementation. At this stage, a new product is developed in response to an emerging need within the country. Production is small-scale, requires highly skilled workers and is concentrated in the country of innovation. The manufacturer occupies an almost monopoly position. Only a small part of the product goes to the foreign market.
• 2. Growth. Demand for the product is growing, its production is expanding and spreading to other developed countries. The product becomes standardized. Competition is growing, exports are expanding.
• 3. Maturity. This stage is characterized by large-scale production, the competitive struggle is dominated by the price factor. The country of innovation no longer has competitive advantages. Production is moving to developing countries where labor is cheaper.
• 4. Decline. In developed countries, production is decreasing, sales markets are concentrated in developing countries. The country of innovation becomes a net importer.