INVESTMENT AND TRADE 203 to sell largely on the basis of price (an assumption inherent in the definition),then it follows that such products will not pose the problem of market information quite so acutely for the less-devel- oped countries.This establishes a necessary if not a sufficient condi- tion for investment in such industries. Of course,foreign investors seeking an optimum location for a captive facility may not have to concern themselves too much with questions of market information;presumably,they are thor- oughly familiar with the marketing end of the business and are looking for a low-cost captive source of supply.In that case,the low cost of labor may be the initial attraction drawing the investor to less-developed areas.But other limitations in such areas,accord- ing to our hypothesis,will bias such captive operations toward the production of standardized items.The reasons in this case turn on the part played in the production process by external economies. Manufacturing processes which receive significant inputs from the local economy,such as skilled labor,repairmen,reliable power,spare parts,industrial materials processed according to exacting specifica- tion,and so on,are less appropriate to the less-developed areas than those that do not have such requirements.Unhappily,most indus- trial processes require one or another ingredient of this difficult sort. My guess is,however,that the industries which produce a stand- ardized product are in the best position to avoid the problem,by producing on a vertically-integrated self-sustaining basis. In speculating about future industrial exports from the less- developed areas,therefore,we are led to think of products with a fairly clear-cut set of economic characteristics.5 Their production function is such as to require significant inputs of labor;otherwise there is no reason to expect a lower production cost in less-developed countries.At the same time,they are products with a high price elasticity of demand for the output of individual firms;otherwise, there is no strong incentive to take the risks of pioneering with production in a new area.In addition,products whose production process did not rely heavily upon external economies would be more obvious candidates than those which required a more elaborate industrial environment.The implications of remoteness also would be critical;products which could be precisely described by stand- ardized specifications and which could be produced for inventory without fear of obsolescence would be more relevant than those 5.The concepts sketched out here are presented in more detail in my "Problems and Prospects in the Export of Manufactured Products from the Less-developed Countries,"U.N.Conference on Trade and Development,Dec. 16,1963(mimeo..）.INVESTMENT AND TRADE 203 to sell largely on the basis of price (an assumption inherent in the definition), then it follows that such products will not pose the problem of market information quite so acutely for the less-devel￾oped countries. This establishes a necessary if not a sufficient condi￾tion for investment in such industries. Of course, foreign investors seeking an optimum location for a captive facility may not have to concern themselves too much with questions of market information; presumably, they are thor￾oughly familiar ~ith the marketing end of the business and are looking for a low-cost captive source of supply. In that case, the low cost of labor may be the initial attraction drawing the investor to less-developed areas. But other limitations in such areas, accord￾ing to our hypothesis, will bias such captive operations toward the production of standardized items. The reasons in this case turn on the part played in the production process by external economies. Manufacturing processes which receive significant inputs from the local economy, such as skilled labor, repairmen, reliable power, spare parts, industrial materials processed according to exacting specifica￾tion, and so on, are less appropriate to the less-developed areas than those that do not have such requirements. Unhappily, most indus￾trial processes require one or another ingredient of this difficult sort. My guess is, however, that the industries which produce a stand￾ardized product are in the best position to avoid the problem, by producing on a vertically-integrated self-sustaining basis. In speculating about future industrial exports from the less￾developed areas, therefore, we are led to think of products with a fairly clear-cut set of economic characteristics.Vheir production function is such as to require significant inputs of labor; otherwise there is no reason to expect a lower production cost in less-developed countries. At the same time, they are products with a high price elasticity of demand for the output of individual firms; otherwise, there is no strong incentive to take the risks of pioneering with production in a new area. In addition, products whose production process did not rely heavily upon external economies would be more obvious candidates than those which required a more elaborate industrial environment. The implications of remoteness also would be critical; products which could be precisely described by stand￾ardized specifications and which could be produced for inventory without fear of obsolescence would be more relevant than those 5. The concepts sketched out here are presented in more detail in my "Problems and Prospects in t,he Export of Man~fact~uredProdiicts from the Less-developed Countries," U.N. Conference on Trade and Development, Dec. 16, 1963 (mimeo.)