Strong demand in Asia boosted these economies to the top two spots in the IMD World Competitiveness Yearbook (WCY).
They were streaks ahead of the traditional European economies in the survey that analyses how a nation’s environment creates and sustains the competitiveness of enterprise.
It is the first time in decades an Asian economy has topped the list. Other Asian countries also leaped up the league table.
Taiwan rose from 23rd place last year to eighth and Malaysia climbed from 18th to finish tenth.
Embattled Japan, however, dropped 10 places to finish 27th among the world’s most competitive countries.
The USA finished a strong third, with a large gap between fourth placed Switzerland.
Germany led the European superpowers in 16th place, with the survey praising its “strong trade, excellent infrastructure, and sound financial reputation”.
The UK lagged in 22nd, slipping a place from last year. France ended up in 24th place.
The Nordic model proved robust, with Sweden (6th) and Norway (9th) both finishing in the top 10 nations.
China topped the emerging markets, climbing two places to finish in 18th. It was followed by India (31), Brazil (38) and Russia (51).
Spain (36), Portugal (37) and Greece (46) felt the affects of the European sovereign debt crisis, languishing down the table.
The survey results echo the Global Financial Centres report issued earlier this year, in which Hong Kong and Singapore saw double-digit increases to snap at the heels of the traditional financial champions. London lost its top spot in the table for the first time, tying with New York.