Ireland has moved up 4 places and is now ranked 26 out of 117 economies in international competitiveness according to rankings compiled by the World Economic Forum.
Finland is rated the world's most competitive country with the US second although the study recorded growing business concern over the Bush administration's handling of the nation's finances.
Apart from Finland, four other Nordic nations - Sweden at third, Denmark at fourth, Iceland at seventh and Norway at ninth - were among the top 10 in the table issued with the Forum's Global Competitiveness Report 2005.
The others in the top 10 were Taiwan, fourth, Singapore, fifth, Switzerland, eighth, and Australia - up from 14th last year - at 10th.
The study said the north European nations "are challenging the conventional wisdom that high taxes and large safety nets undermine competitiveness".
While their own business communities pointed to high tax rates as a potential problem area, "there is no evidence that these are adversely affecting the ability of these countries to compete effectively in world markets, or to provide ... some of the highest standards of living in the world," Forum chief economist Augusto Lopez-Claro said.