New Zealand has been ranked the 18th most competitive country in the world, beating Australia for the first time.
According to the annual Global Competitiveness Index, New Zealand jumped five places to 18th, while Australia slipped one to 21st.
The index measures economic competitiveness across 111 indicators including the time it takes to establish a business, innovation and infrastructure.
The New Zealand Initiative, an economic think-tank which surveyed 50 local chief executives for the index, says New Zealand's economy seems to be improving while Australia's is falling behind.
It says the performance is startling considering five years ago New Zealand was in a deep recession while Australia was debt free, with a mining boom.
The New Zealand Initiative says the steady recovery of the New Zealand economy and prudent pro-growth policies have helped New Zealand hold its competitive ground.
Executive director Oliver Hartwich says the result is a mix of Australia doing badly and New Zealand doing well.
Switzerland was named the most competitive country for the fifth year in a row.
Singapore, Finland, Germany and the United States rounded out the top five.
Business New Zealand says the ranking is a good sign the economy is on the right track but not a cause for celebration.
Chief executive Phil O'Reilly says having little corruption is fundamental but improvements need to be made in other areas - such as high quality education, more scientists, more infrastructure and more innovation."
