Product life-cycle theory

Theory to describe international trade patterns.

The Product Life Cycle Theory is an economic theory that was developed by Raymond Vernon in response to the failure of the Heckscher–Ohlin model to explain the observed pattern of international trade. The theory suggests that early in a product's life-cycle all the parts and labor associated with that product come from the area where it was invented. After the product becomes adopted and used in the world markets, production gradually moves away from the point of origin. In some situations, the product becomes an item that is imported by its original country of invention. A commonly used example of this is the invention, growth and production of the personal computer with respect to the United States.

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