Product

International Product Life Cycle (IPLC) in International Trade

Meaning of International Product Life Cycle (IPLC), according to the Dictionary of International Trade (Global Negotiator): This marketing describes the diffusion process of an innovation across national boundaries. Typically, demand first grows in the innovating country (usually a developed nation like United States). In the beginning, excess production in the innovating country (greater than domestic demand) will be exported to other developed countries where demand also grows. Only later does demand begin in less developed countries. Production, consequently, takes places first in the innovating country. As the product matures and technology is diffused production occurs in other industrialized countries and then in less developed countries. Efficiency and comparative advantages shift from developed countries to developing countries. Finally, advanced countries, no longer cost effective, import products from their former customers. Examples of typical IPLCs can be found in the textile industry and the computer/software industry. For example, many textiles are manufactured in Bangladesh and software in India (Bangalore). See assembly operations; offshoring; outsourcing;