following schematic outline of the CPC model aims to incorporate these problems.

Fig. 1 Panel A illustrates CPC by means of schematic forms of four growth curves of import (M), domestic production (S), domestic consumption (D), and export (X) of a modern industry products. Statistically domestic consumption is derived as apparent consumption, i.e. production plus import minus export $ (D=S+M-X) $ but theoretically its growth curve sets the pace of the CPC development of a particular industry, through its impact on domestic entrepreneurs. Panel B illustrates the change of the two key ratios in the process of the CPC development, import/consumption ratio (M/D) and export/production ratio (X/S) which are often used to measure the progress of import substitution and export expansion respectively. Although export starts only after import finishes in this schematic diagram, in reality products are differentiated within the same product group and the export of lower quality product starts while the import of sophisticated one still continues.

Panel C illustrates the CPC by a single growth curve of production/consumption ratio (S/D). Five development phases, introductory, import substitution, export, mature, and reverse import, are distinguished by the specific values of S/D, namely 0.5, 1.0, maximum, 1.0 again. These demarcation values are set arbitrarily but the distinction of successive phases remains useful in describing a life cycle of an industry. The main characteristics of these five phases are as follow.

At introductory phase, a new product is introduced through import from advanced countries and its domestic demand increases gradually. Domestic production starts through imitation or borrowed technology but the domestic product cannot compete with imported ones because of its inferior quality and high production cost. At the next import substitution phase, domestic consumption increases rapidly, reducing thereby the share of import in the home market. Production technology is standardized and large-scale production is established so that the domestic production gradually replaces import with improved quality and cheaper price.

At the export phase the domestic product starts to be exported abroad. However, the growth of domestic demand slows down and the export growth compliments it and maintains the increase of production. At the mature phase both domestic demand and export slow down, preventing further expansion of production. Export starts to decrease as domestic product fails to compete with the product of late-starting countries. Finally at the reverse import phase, products of late-starting countries, cheap and of no less inferior quality, starts to be imported and replace gradually domestic products at home market, thus accelerating the decline of domestic production.

It has been confirmed that major modern industries of Japan followed the CPC development. Fig. 2 charts the CPC development of cotton fabrics, which was a pioneer industry of the CPC development and showed a typical pattern covering all five phases. The start of import and consumption of modern cotton fabrics dated back to the 1850s and import substituting production was attempted actively through the 1870s and by 1879 the industry reached import substitution phase. Rapid expansion of production continued through the following decades and it reached the export phase in 1909 and export expansion continued through the 1930s. In the post-World War Two period, however, the domestic production reached its peak in the early 1960s, declined thereafter to the reverse import phase in the