Sweden, in second spot, and Singapore in third leapfrogged the United States in the WEF’s Global Competitiveness Report 2010/2011.
Last year the Asian city-state ranked third and Sweden fourth. Germany climbed to fifth from seventh.
The WEF said America slipped in the ranking due to a build-up in US macroeconomic imbalances, a weakening of the country’s public and private institutions and concerns about the state of its financial markets.
The report said a lack of macroeconomic stability continues to be America’s greatest area of weakness, with repeated fiscal deficits leading to burgeoning public indebtedness.
It also said that US business leaders show less trust in politicians and the government’s ability to maintain an arm’s-length relationship with the private sector.
The report factors in a survey among business leaders, assessing the government’s efficiency and transparency.
Switzerland retained first place thanks to its high capacity for innovation and sophisticated business culture. Nordic countries did well, with Finland and Denmark joining Sweden in the top 10.
China rose two places to 27th and was the most competitive of the major emerging economies.