New Zealand has moved up four places in the World Economic Forum's annual Global Competitiveness Report, narrowly overtaking Iceland, badly mauled "Celtic Tiger" Ireland, Israel and Malaysia.
In 20th place out of 133 countries, New Zealand climbed from 24th a year ago in the report which "measures the institutions, policiesand factors that determine the level of productivity" by polling 13,000 business leaders.
Despite precipitating a near meltdown in the global financial system which has plunged it, and others into recession, the US only fell one place from its top spot while Switzerland moved from second to first.
The New Zealand Institute noted New Zealand continued to score well on our institutions and our health and primary education sectors.
However in the business sophistication and innovation categories, which the institute said were strongly correlated to prosperity, New Zealand was further down at 34th and 23rd place respectively.
"The drivers of our relatively poor performance are partly affected by our small size and remote location," said NZ Institute director Rick Boven.
"Our businesses have relatively few suppliers, we do not have well developed clusters of businesses and our businesses do not participate in many steps of their value chains."
While the quality of our scientific research institutions was high, New Zealand was held back by low availability of scientists and by low company spending on research and development, said Boven.
But New Zealand had made some efforts in recent years to improve innovation "and we have not yet received the full rewards from those efforts as yet".
