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|HUMAN CAPITAL & INVESTMENT CHARACTERISTICS,|
IMPLICATIONS FOR LOCATIONAL
|C Y C L E ... P H A S E S|
"Research & Development", "Innovation", "Market Development"
From "Rapid Growth" to "Competitive Turbulence"
Saturation, Life Extension, Possible Decline & Death (Replacement)
|Technology||Short production runs.
Rapidly changing production technologies and "ways of doing things".
Dependence on external (incl.agglomeration-) economies favoring incubator-type locations.
|Gradual introduction of mass production methods.
Frequent variation in production techniques.
|Long runs & stable technology.
Few innovations of importance, with the possible exception of
|Capital intensity||Relatively low capital (-goods) intensity [but differing widely
But high human capital intensity [see below]).
|High (due to high rate of obsolescence). Importance of venture capital and venture-capital locations||High (due to large investments in specialized equipment) and Infrastructure & overhead capital equipment (tends to favor large multinational firms "with deep pockets" at low-wage locations).|
|Industry structure||Entry dependent on know-how.
Numerous firms providing specialized services.
|Initially: more and more firms.
But then also failures and mergers (buy-outs & shake-out of the weak, i.e. those unable to make the transition from skilled- labor- intensive to capital- intensive production).
|Less and less firms.
New entries become difficult due to need for financial resources.
|Critical Human Inputs (required at production locations)||Scientific & engineering.
|Unskilled and semi-skilled labor |
(at low, "competitive" wage levels, often leading to moves to less-developed regions in Western countries or to 3rd world countries).
|Demand Structure||Sellers' market.
Market proximity. Monopolistic pricing.
Large profits often hidden by rapid depreciation of development costs and reinvestment
Performance and price of substitutes determined buyers' expectations.
|Early entry of many aggressive emulators (attracted by large profits).
Individual producers face growing price elasticity.
Intra-industry competition leads to price reductions.
Competitors begin to encroach on (or "squeeze") one other's market areas.
Product information spreading.
Relatively stable market shares.
Product information easily accessible on the Internet or elsewhere.
| Econ & Bus Geog