New Zealand is the 13th most competitive nation in the world, according to the latest global survey.
That means it's moved up three places since last year and 10 places since 2012.
Economic Development Minister Steven Joyce says the improvement reflects the work the government is doing to reduce costs for businesses.
The Global Competitiveness Index ranks countries' economic competitiveness based on economic data and business surveys.
New Zealand is in the top six countries for lack of corruption, ease of starting a business, legal rights, transparent policy making, soundness of banks and access to loans.
It doesn't do so well for quality of road and rail infrastructure, levels of saving and levels of exports.
In those categories, New Zealand placed between 47th and 116th.
The top 10 countries were Switzerland, Singapore, US, Netherlands, Germany, Sweden, UK, Japan, Hong Kong and Finland. Australia ranked 22nd.
Joyce says the government's Business Growth Agenda programme supports an environment where businesses have the confidence to invest, grow and create more and better paying jobs.
BusinessNZ chief executive Kirk Hope says New Zealand's overall high ranking reflects the strength of the country's economic fundamentals. He said areas which could be improved included research and development spending, technology uptake and local competition.