Chapter 2: Product Proliferation, Comparative Advantage and Developing Countries
INTRODUCTION Partly as a result of advances in information technology which allow firms to tailor their products to rapid changes in consumer demand, ‘there is growing evidence that the general length of product cycles is tending to become shorter. Thus, in order to continue to grow and make profits firms need to innovate on a regular basis’ (Dicken (1998) p. 162). For Best (1990) these developments on the demand side mark an entirely new form of competition which is characterized by economies of time in the implementation of new product designs. ... Responding to changing market demands means being able to supply consumers with a newly designed product ... success depends not upon being the lowest cost (or highest throughput) producer, but upon the minimization of product development and product changeover times (Best (1990) p. 14). The innovational imperative that is associated with this ‘new competition’ has led to a proliferation of new products in a number of industries, the most striking of which is perhaps the clothing industry. From among the many theories of international trade that now exist, the model of the product cycle seems especially well-suited to an analysis of how patterns of comparative advantage in the Third World are likely to be affected by the ongoing trend towards product proliferation and globalization in the world economy. For two of the most prominent of the factors that are driving this process, namely, technical change (especially in information technologies) and foreign investment, also lie at the core of the notion...
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