The US has been knocked off the top spot in a closely watched annual ranking of competitiveness, falling to sixth place. It was overtaken by Switzerland, three Nordic countries and Singapore.
Growing economic imbalances and a relative lack of efficiency and transparency in US public institutions marked the country down in this year's league table by the World Economic Forum (WEF).
Also falling fast in the table was France, which declined from 12th spot to 18th, on the back of relatively weak scores for its macroeconomy, its institutions and the efficiency of its markets.
The Republic retained its 2005 ranking of 21st position of the 125 countries surveyed. The Irish economy performed strongest in the area of market efficiency. It also scored well in the areas of higher education/training, business sophistication and the calibre of its institutions but was dragged down by a relatively poor rating for infrastructure.
The WEF's ranking is one of the more significant measurements of countries' economic potential since it aggregates an extensive number of different indicators to arrive at its score.
The ranking has been heavily revised for 2006-07, the WEF said, incorporating many new indicators of competitiveness and improving its accuracy as a guide to the medium and long-term economic performance of different countries.
But small changes in the position in the league, such as Britain's decline from ninth to 10th, do not reflect a serious worsening of its competitiveness, since the difference in countries ranked close to each other is minor. Augusto Lopez-Claros, the lead author of the WEF's competitiveness index, said the rankings were most useful in spotting big changes in countries' overall scores and spotting trends .
The current fashion for anything to do with the fast-growing emerging markets of Brazil, Russia, India and China does not bear very close scrutiny, he said.
Russia's position fell to 62 from 53 last year on the back of serious concerns about its institutions. In spite of a good economic performance on the back of high oil prices, "you have to buy justice", Mr Lopez-Claros said, which makes it a very difficult place to locate business.
China's fall from 48 to 54 represented extreme difficulties with protecting intellectual property rights, while Brazil's economy was judged as fragile.
Even though Swiss economic performance has been far from stellar in recent years, the WEF justified its ranking at the top of the table as reflecting "a combination of a world class capacity for innovation and a highly sophisticated business culture".
