According to the product life-cycle theory, the locus of global produc

QUESTION

According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries.

Which of the following is most likely to be a consequence of these trends?

A. U.S. imports become less capital-intensive than U.S. exports.

B. The pattern of international trade is affected by differences in factor endowments rather than differences in productivity.

C. Over time, the United States switches from being an exporter of a product to an importer of the product.

D. The wage rates in the United States decrease.

E. Developing nations fail to upgrade their skill levels to compete with advanced countries.

ANSWER

C