Question

If you think of the international product life cycle, at one time in the product life cycle, before products die, developing countries take the inventions from developed inventor countries’ hands.

So, developing countries must become richer than the developed countries in time.

This usually does not happen. Why?

Answer 1

The demand for products is maximum during the introduction, growth and maturity stages of the product lifecycle. During these phases, the developed nations produce and sell the product globally. Once, all the global demand is satisfied the demand decreases and the product enters decline stage. During this stage, developing countries take the inventions from developed inventor countries’ hands. However, even if there are no invention and development costs now, there is no market to sell either. The developing countries have very limited demand to fulfill, and that too from poorer markets where they must sell at low prices. The revenue generated is very less. Hence, developing countries never become richer than the developed countries in time. The only way for developing countries to become rich is through R&D and developing newer products that will satisfy unmet demands.