THE PRODUCT CYCLE HYPOTHESIS IN A NEW INTERNATIONAL ENVIRONMENT 259 disposition to move first into the traditional areas visibly declined.To illustrate: For product lines introduced abroad by the 180 firms before 1946,the probability that a Canadian location would come earlier than an Asian location was 79 percent; but for product lines that were introduced abroad after 1960,the probability that Canada would take precedence over Asia had dropped to only 59 percent. The consequences of this steady shift in preferences could be seen in a corresponding shift in the geographical distribution of the foreign subsidiaries of the 180 firms.Before 1946,about 23 percent of the subsidiaries had been located in Canada;but by 1975,the proportion was about 13 percent,with the offsetting gains being recorded principally in Asia,Africa,and the Middle East. With numerous indications that US firms were feeling at ease over a wider portion of the earth's surface,it comes as no surprise that the interval of time between the introduction of any new product in the United States and its first production in a foreign location has been rapidly shrinking.Table 2 portrays the time lapse between the introduction of 954 products in the United States and their first overseas production via the manufacturing subsidiaries of the introducing firm. The data also suggest in various ways that the trends just discussed have been strongly self-reinforcing.For instance,firms that had experienced a considerable number of prior transfers to their foreign producing subsidiaries were quite consistently quicker off the mark with any new product than were firms with fewer TABLE 2 Spread of Production of 954 New Products by 57 US-Based MNCs to their Foreign Manufacturing Subsidiaries,Classified by Period when initially introduced in the United States Period when Number of Percentage transferred abroad,by number of years introduced in products between USintroduction and initial transfer US within I year after within 2-3 years after 1945 56 10.7 89 19461950 149 8.1 10.1 1951-1955 147 7.5 10.2 1956-1960 180 13.3 17.8 1961-1965 165 22.4 17.0 1966-1970 158 29.7 15.8 1971-1975 99 35.4 162 Total 954 18.0 140 Source:Vernon and Davidson,cited in text. prior transfers.Besides,as firms introduced one product after another into a given country,the lapse of time between the introduction of successive products in that country steadily declined. All told,therefore,the picture is one of an organic change in the overseas networks of large US-based firms.The rate of spread of these networks,whether measured by subsidiaries or by product lines,is slightly lower in the first half of the Some measures employed in the Vernon-Davidson study-counts based on 954 individual products rather than on subsidiaries or product lines-show Latin America also increasing its relative share.See Table 17,p.52 of the report.THE PRODUCT CYCLE HYPOTHESIS IN A NEW INTERNATIONAL ENVIRONMENT 259 disposition to move first into the traditional areas visibly declined. To illustrate: For product lines introduced abroad by the 180 firms before 1946, the probability that a Canadian location would come earlier than an Asian location was 79 percent; but for product lines that were introduced abroad after 1960, the probability that Canada would take precedence over Asia had dropped to only 59 percent. The consequences of this steady shift in preferences could be seen in a corresponding shift in the geographical distribution of the foreign subsidiaries of the 180 firms. Before 1946, about 23 percent of the subsidiaries had been located in Canada; but by 1975, the proportion was about 13 percent, with the offsetting gains being recorded principally in Asia, Africa, and the Middle East." With numerous indications that US firms were feeling at ease over a wider portion of the earth's surface, it comes as no surprise that the interval of time between the introduction of any new product in the United States and its first production in a foreign location has been rapidly shrinking. Table 2 portrays the time lapse between the introduction of 954 products in the United States and their first overseas production via the manufacturing subsidiaries of the introducing firm. The data also suggest in various ways that the trends just discussed have been strongly self-reinforcing. For instance, firms that had experienced a considerable number of prior transfers to their foreign producing subsidiaries were quite consistently quicker off the mark with any new product than were firms with fewer TABLE 2 Spread of Production of 954 New Products by 57 US-Based MNCs to their Foreign Manufacturing Subsidiaries, Classified by Period when initially introduced in the United States Source: Vernon and Davidson, cited in text. prior transfers. Besides, as firms introduced one product after another into a given country, the lapse of time between the introduction of successive products in that country steadily declined. All told, therefore, the picture is one of an organic change in the overseas networks of large US-based firms. The rate of spread of these networks, whether measured by subsidiaries or by product lines, is slightly lower in the first half of the h1 Some measures employed in the Vernon-Davidson studycounts based on 954 individual products rather than on subsidiaries or product linesshow Latin America also increasing its relative share. See Table 17, p. 52 of the report. Period when introduced in US Number of Percentage transferred abroad, by number of years products between US introduction and initial transfer within 1 year after within 2-3 years after 0/ 0/ /0 /0 1945 56 10.7 8.9 1946-1950 149 8.1 10.1 1951-1955 147 7.5 10.2 1956-1960 180 13.3 17.8 1961-1965 165 22.4 17.0 1966-1970 158 29.7 15.8 1971-1975 99 35.4 16.2 Total 954 18.0 14.0