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lecture note 9

3 entrepreneurs create new manufactured goods in

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Unformatted text preview: w manufactured goods in response to perceived demand. (4) Demands are closely related to per capita income. (5) After a product is introduced, where does the entrepreneur look for additional markets? (6) Entrepreneurs export to markets with similar per capita incomes. (7) This is suppose to help explain the large volume of trade among the high income developed countries. 4. The product cycle (Vernon) 5 (1) New products are first introduced in the high income countries ala Linder. Production must initially take place near the market: production may require special skills, and critical revision. (2) Exports begin to other high income countries. (3) As development proceeds, (a) exports begin to lower income countries as incomes grow there, (b) production becomes more standardized, requiring less skilled labor. (4) Eventually production shifts to the lower income countries as producers in the high-income countries move on to the next generation of products. 6 (5) Finally, the original produ...
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