Editing Business cycle (section)

=== Product based theory of economic cycles ===
[[File:Product based theory of economic cycles.png|thumb|International product life cycle]]
This theory explains the nature and causes of economic cycles from the viewpoint of life-cycle of marketable goods.<ref>{{cite journal | last1 = Vernon | first1 = R. | year = 1966 | title = International Investment and International Trade in the Product Cycle | url = http://rcin.org.pl/Content/56666| journal = Quarterly Journal of Economics | volume = 5 | issue = 2| pages = 22–26 | doi= 10.2307/1880689| jstor = 1880689 }}</ref> The theory originates from the work of [[Raymond Vernon]], who described the development of international trade in terms of product life-cycle – a period of time during which the product circulates in the market. Vernon stated that some countries specialize in the production and export of technologically new products, while others specialize in the production of already known products. The most developed countries are able to invest large amounts of money in the technological innovations and produce new products, thus obtaining a dynamic comparative advantage over developing countries.

Recent research by Georgiy Revyakin proved initial Vernon theory and showed economic cycles in developed countries overran economic cycles in developing countries.<ref>{{cite journal | last1 = Revyakin | first1 = G. | year = 2017 | title = A new approach to the nature of economic cycles and their analysis in the global context | journal = Eureka: Social and Humanities | volume = 5 | pages = 27–37 | doi = 10.21303/2504-5571.2017.00425 | doi-access = free }}</ref> He also presumed economic cycles with different periodicity can be compared to the products with various life-cycles. In case of [[Kondratiev waves]] such products correlate with fundamental discoveries implemented in production (inventions which form the [[technological paradigm]]: Richard Arkwright's machines, steam engines, industrial use of electricity, computer invention, etc.); [[Kuznets swing|Kuznets cycles]] describe such products as infrastructural components (roadways, transport, utilities, etc.); [[Juglar cycles]] may go in parallel with enterprise fixed capital (equipment, machinery, etc.), and [[Kitchin cycle]]s are characterized by change in the society preferences (tastes) for [[consumer goods]], and time, which is necessary to start the production.

Highly competitive market conditions would determine simultaneous technological updates of all economic agents (as a result, cycle formation): in case if a manufacturing technology at an enterprise does not meet the current technological environment – such company loses its competitiveness and eventually goes bankrupt.