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By Harbhajan S. Kehal (eds.)

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Vernon’s (1966) model of the product cycle was primarily intended to explain the expansion of US MNEs in Europe after the Second World War and, at the time of its inception, could account for the high concentration of innovations in, and technological superiority of, the USA. Although during the late 1960s and early 1970s a number of empirical studies provided results consistent with the hypothesis’ insightful description of the dynamic process of product development, the model is now regarded by many as largely anachronistic.

Specifically, their results show that in the context of developing g countries ‘the estimated coefficients of the variables used as proxies for human capital as well as their t ratios increase in magnitude across the consecutive sample periods’ (p. 1602).

The changes in this region are being seen as so phenomenal that just in a few decades the whole area, accommodating g the bulk of the world’s poor population, may come to stand among the family of well-off nations. The impact on global poverty is expected to be equally dramatic and in the process may give rise to a further developmental push to the rest of the world, particularly the remaining lagging areas off the globe. Viewed from this perspective, the area will continue to be the focus of growth and developmental activities for many decades to come and will attract FDI on an increasingly larger scale.

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