Finland is the world's most competitive economy followed by the United States, Sweden, Denmark and Taiwan, according to a Global Competitiveness Report released today.
Ireland dropped one place from 20th to 21st place in the survey among business leaders measured economic competitiveness based on a combination of technology, the quality of public institutions and the macroeconomic environment.
Finland, home to mobile phone giant Nokia, remained in first place.
The United States scored high on technology but weak on the quality of its public institutions and economic environment, particularly public finances, where it ranked 50th.
Germany moved up one notch to 13th and France gained two places to 26th. The WEF said both countries showed improvements driven by better public institutions and technology, despite budgets troubles.
"If there is one lesson from our exercise, it is that the strength and coherence of government policies have an enormous bearing on a country's ranking," Mr Augusto Lopez-Claros, chief economist of the WEF, said in a statement.
Italy is the lowest ranked European Union member 41st, down from last year's place at 33.
China fell to 44th from 38th, marked by a drop in the perceived quality of its public institutions, with substantially lower scores on independence of its judiciary and corruption in the public sector, the WEF said.
Russia ranked 70th from last year's 66th place despite improvements in its economy and technology. The report said Moscow was penalized for its high inflation, inefficiencies in the banking system and low scores in a broad range of institutional factors.
Chile slipped four places to 28th but is still the highest ranking economy in Latin America, way ahead of Mexico, the second-highest in the region at 47th.
Botswana is Africa's best performing economy in 36th place, showing progress in most areas except for low scores in innovation. South Africa slipped to 42nd from 34th because of a perceived deterioration in the quality of its public institutions.
Haiti, Chad and Angola showed the lowest scores.