New Zealand is now ranked in 16th place on the world stage for the world's most competitive economies.

The country moved up one place in this year's IMD World Competitiveness Yearbook, taking a place higher than Australia.

Hong Kong took the prime spot, seeing the United States decline down to position three - a significant drop from last year when it reigned at number one.

Ranked close to Hong Kong was Switzerland in second place.

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Singapore, Sweden, Denmark, Ireland and the Netherlands, along with Norway and Canada also made it in to the top 10 of the world's most competitive economies.

Director of the IMD World Competitiveness Center Professor Arturo Bris said a consistent commitment to a favourable business environment was central to Hong Kong's rise.

"The US still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness," Bris said.

Bris said there are a number of factors which influence a country's ranking.

"The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions."

Western European economies have also continued to improve, with researchers highlighting the ongoing post-financial-crisis recovery of the public sector as a key driver for rank influence, he said.