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How much of Raymond Vernon's product cycle thesis is still relevant today: evidence from the integrated circuits industry

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  • Rajah Rasiah
  • Xiao-Shan Yap

Abstract

Vernon's product cycle thesis has increasingly been questioned as industries experienced differentiation and dispersal of production stages, while the need for proximity for interactions to take place between scientists and engineers, and consumers ended following the introduction of computerised inventory and production, and planning systems. This paper re-examines this thesis using the integrated circuits (IC) industry. The results show that IC multi-nationals have continued to retain frontier R%D and wafer fabrication activities at locations endowed with strong human capital and research centers. However, IC firms are attracted to relocate frontier R%D activities in distant host-sites, such as USA, Japan, Spain, Germany, Russia and Israel that are endowed with sophisticated science, technology and innovation infrastructure, and scientists and engineers. Also, IC manufacturing is too knowledge-intensive to be attracted to the least developed countries.

Suggested Citation

  • Rajah Rasiah & Xiao-Shan Yap, 2019. "How much of Raymond Vernon's product cycle thesis is still relevant today: evidence from the integrated circuits industry," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 11(1), pages 56-77.
    • Handle: RePEc:ids:ijtlid:v:11:y:2019:i:1:p:56-77
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    Cited by:

    1. Figueiredo, Paulo N. & Larsen, Henrik & Hansen, Ulrich E., 2020. "The role of interactive learning in innovation capability building in multinational subsidiaries: A micro-level study of biotechnology in Brazil," Research Policy, Elsevier, vol. 49(6).
    2. Alper Yılmaz, 2024. "Do Geopolitical Risks and Political Stability Drive Foreign Direct Investments? New Evidence from Dynamic Panel CS-ARDL Model," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 9(1), pages 61-87.
    3. Natsuki Kamakura, 2022. "From globalising to regionalising to reshoring value chains? The case of Japan’s semiconductor industry [Reorienting the drivers of development: alternative paradigms]," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 15(2), pages 261-277.

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