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5 Theories of international life cycle of the product.
This theory explains the cause of international trade activities through the life cycle stages of the product internationally. When the product is in the decline stage, eliminated in its life cycle, it is sold abroad to prolong the life cycle ensuring profitability for the business. This is the cause of international commercial activities.
According to this theory, the new product will go through the following stages:
- stage new product development phase usually takes place in the water collection high income with high-tech know-how. Products will be manufactured with a high level of concentration of capital.
- Ripe stage: the product will have the characteristics of a product is mass-produced. Foreign demand will lead to increased exports from developing countries products.
- Phase product standardization. When the product is mass-produced, low labor costs will become more important. The production will transfer to countries with lower labor costs. Products will become the imports to the country originally developed it.
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