Tijuana,Mexico is across the border from San Diego,California.It has become a world-leading producer and exporter of television sets and computer monitors,which it assembles in modern factories owned by multinational consumer electronics firms such as Sony.Initially,these electronics were produced in the industrialized countries of their parent companies,and after several years,the production moved to Tiajuana.This is an example of
A)the product cycle.
B)intraindustry trade.
C)the specific factors model.
D)the magnification effect.
E)None of the above.

Question

Quizplus · Accepted Answer

This situation is an example of the product cycle theory, which describes the international trade pattern where a product is first produced in the country where it was invented, but eventually the production shifts to other countries as the product becomes more standardized and the production costs increase. In this case, the multinational electronic firms initially produced the television sets and computer monitors in industrialized countries, but later moved the production to Tijuana as the product became more standardized and the production costs decreased.

Tijuana,Mexico Is Across the Border from San Diego,California