Mexico has established many free trade agreements and remains highly dependent on trade with the US. It has a stable macroeconomic environment and prudent fiscal policy but narrow tax base. The Pacific Alliance aims to increase trade and investment between Mexico, Chile, Colombia and Peru. Mexico has a two-speed economy, with modern sectors growing but traditional sectors lagging, lowering average productivity. Continued low productivity, especially in small informal businesses, is a major barrier to faster economic growth. Membership in the Pacific Alliance could promote investment and trade, helping address Mexico's productivity challenges.