Professor Stephane Garelli of IMD, the Swiss business school, concludes from this year's study that there is often a large mismatch between the performance of a country's economy and its government.

"There is a striking difference between the achievements of the US economy in 2005 (3.5% growth) and the US$318bn budget deficit accumulated by the federal government and the US$8,000bn debt," observed Professor Garelli.

In this respect, the governments of Venezuela, Argentina, Brazil, Mexico and Italy show the weakest performance, significantly lagging behind their countries' economic performance, he noted.

"They fail to perform on several fronts: budget deficits, debt, taxes, bureaucracy, etc," Professor Garelli stated.

The US and France are the two industrial nations that show the biggest difference between the performance of their governments and the performance of their economies, with both countries having large deficits, suggesting state inefficiency, he added.

To support and stimulate competitiveness, governments need to remain "on top of economic imperatives," explained the Professor.

"Hong Kong and Singapore are catching up with the US because their governments are more in synchronisation with economic performance," he noted.

Making up the rest of the top ten are Iceland, Denmark, Australia, Canada, Switzerland, Luxembourg and Switzerland. Ireland improved by one place to 11th, but the biggest climber in the index was China, which has moved up to 19th place from 31st in 2005. India has also improved its relative competitiveness, moving up 10 places to 29th.

Italy, ranked 56th, was the only country in the ranking with no economic growth in 2005.