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This article explores how the structural arrangements under the North American Free Trade Agreement (NAFTA) have contributed to the unfolding of the financial crisis and to its international transmission. It reviews the developments over the last two decades in Canada and Mexico based on the model of export-led growth which has also been implemented in much of the rest of the world. In light of this, the authors argue that NAFTA needs redesigning by taking more seriously into consideration the problem of effective demand that remains a structural flaw for any model that relies on export-led growth.
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