The international product life-cycle theory may have its greatest usefulness in explaining trade and investment behavior when international firms introduce their new products in home markets first.

Question

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The international product life-cycle theory may have its greatest usefulness in explaining trade and investment behavior when international firms introduce their new products in home markets first. For example, personal computers were initially introduced in the United States, then exported to other countries. Over time, production moved to lower-cost locations such as Taiwan and China, and now almost all computers sold in the United States are imported from abroad.

The International Product Life-Cycle Theory May Have Its Greatest Usefulness