Suppose you are Indonesia Minister of Trade, analyse Indonesia trade pattern using H-O theory. Pick one industry and analyse the cycle using Product Life-Cycle

According to trade pattern of H-O theory, Indonesia can be considered to be labour-intensive country because there are a lot of industries in indonesia that using labour to produce their goods instead of capital. As for example the textiles and footwear manufacturing industry that require more labour than capital due to the complicated process of making those goods. So, human skill is needed in producing these goods. In the case of original batik textiles from Indonesia, it is made manually using human skill/labour, so it can be said as labour intensive industry or has the factor endowment in labour.

As an Indonesia minister of trade, I will probably export textiles and footwear because in producing those goods, such industry use abundant factors of production in Indonesia, which is labour. Thus, it will have lower cost of production and lead to cheaper price, and cheaper price makes the demand higher and therefore it is better for us to export these goods.

Still referring to H-0 theory, Indonesia then should import goods from a capital-intensive country like Japan with its cars and electronic appliances. Because it will be more expensive for Indonesia if they try to produce these goods by themselves than to import it, due to the lack of capital. So, that is why Indonesia would be better if they import these goods. As the H-O model demonstrate, countries will export products that use their abundant and cheap factor(s) of production and import products that use the countries' scarce factor(s).

I will pick shoes manufacturing industry in Indonesia in analyzing the Product Cycle Life. First stage is product's production in which the product is newly produced, launched and introduced to the consumers, in this case the shoes ,take for example the running shoes. Once the consumer already recognize the existence of the product, they will be familiar and the product will enter the second stage of growth in which the producer will start to gain revenue from the sales until it reached the maturity stage and get maximum profit of the shoes and perhaps starting to plan a new product/differentiate it. And lastly, the shoes will enter the decline stage, it might happen when there is other competitor, or the product is simply not demanded anymore.

Dania Siti Hardiani Hamdan
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Sources :
http://en.wikipedia.org/wiki/Heckscher%E2%80%93Ohlin_model
http://en.wikipedia.org/wiki/Heckscher%E2%80%93Ohlin_theorem
https://www.google.com/search?q=product+life+cycle+stages&oq=prod&aqs=chrome.2.69i57j0l2j69i60j0l2.3734j0j7&sourceid=chrome&es_sm=91&ie=UTF-8