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This chapter focuses on the difference between free trade agreements with rules of origin and customs unions. The first part develops a model to assess the trade and production in intermediate and final goods under these two forms of preferential trading arrangements. The second part performs a cross-sectional econometric analysis of bilateral trade in finished motor vehicles and parts in the OECD area. The findings suggest that ROO can be an effective barrier against third-party suppliers of intermediate goods, and that the ‘border effect’ on trade is mitigated within customs unions.

Using data on the preference and utilization rates of NAFTA for Mexican exports to the United States in 2001, this chapter proposes a method to estimate the likely costs of different Rules of Origin (ROO) for final and intermediate goods, and compares these results with those obtained using the synthetic index proposed by Estevadeordal (2000). Econometric results indicate that changes in tariff classification are more costly for final goods than for intermediate ones, and that technical requirements are the most constraining. For activities subject to regional value content minima, illustrative simulations are carried out to indicate what tariff preference margin would be necessary to compensate for the import content minima. Cost estimates suggest that, at least in the case of NAFTA, preferential market access is quite small, leading to speculations that these conclusions may carry over to other North-South preferential schemes.

This chapter examines Socrates' account of the aim of eros. At different points in his speech, Socrates specifies three aims of eros: the good, reproduction in beauty, and immortality. This chapter argues that those three aims are, in fact, related under the more general desire for eudaimonia, the everlasting happiness characteristic of the divine. The desire for eudaimonia is the telos, the true end of all erotic striving. According to Socrates, we desire a good whose possession we believe to constitute that state, and one which can be had in an enduring way. The desire to reproduce in a beautiful environment is the characteristic activity of this desire for the good, because productive activity is the mortal approximation to the divine state. The reason why the desire for eudaimonia manifests itself in creative activity in the presence of beauty is because this is the distinctively mortal way in which it can achieve a share of divine happiness.

The humanist thinkers from ancient Greece onward asked what sort of life gives the deepest satisfaction and arrived at arresting insights. Aristotle started it off with his thesis that the highest good is the pursuit of knowledge. Like conceptions can be seen in Cervantes, James, and Bergson. Another variant is represented by Voltaire, Dewey, and Sen. These humanist insights into the life that most people desire show how and why enterprising, innovative economies appeared once countries could afford it. The humanists' good life also takes us toward a justification for an economy of entrepreneur-based innovation. It wasn't just the falling way of restrictions and the establishment of property rights that sparked capitalism: it was a widespread desire for problem-solving and exploration. Some say capitalism is inherently unjust to workers in the bottom rungs. But capitalism has, over its history, widened economic inclusion by creating jobs and pulling up low-end pay far beyond what east European socialism and west European corporatism normally achieve.