Product Cycles in U.S. Imports Data

55 Pages Posted: 23 Apr 2007

See all articles by Chong Xiang

Chong Xiang

Purdue University - Krannert School of Management

Date Written: April 2007

Abstract

I identify new products at the levels of finely dis-aggregated (over 10,000) product categories in the U.S. merchandise imports data of 1972-2001. I then construct by industry the South's new products exports (to the U.S.) relative to the North's, normalized by the South's old products exports relative to the North's. I find that relative to old products exports within the same industries, the South's new products exports grow more slowly than the North's until 1992, a time of globalization and outsourcing, and then the South catches up with the North and the South's new products exports grow faster. This is evidence for product cycles. Since I use old products exports within the same industries as controls, this evidence is not tainted by the myriad forces that also affect the North's and the South's new products exports in the data. Furthermore, it takes the South about 15 years to catch up with the North, indicating a sizable technology gap between the North and the South. I find these results only when new products are properly identified and only when old products within the same industries are used as controls. When I assign new products and old products randomly, or when I do not use old products within the same industries as controls, the evidence for product cycles goes away.

Keywords: product cycles, new products

JEL Classification: F1, O3

Suggested Citation

Xiang, Chong, Product Cycles in U.S. Imports Data (April 2007). Available at SSRN: https://ssrn.com/abstract=981783 or http://dx.doi.org/10.2139/ssrn.981783

Chong Xiang (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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