Not surprisingly, the foundation names the United States as the world's most competitive nation. However, IMD Professor Stéphane Garelli said other economies, especially Hong Kong and Singapore, were closing the gap.

Thailand's ranking fell five places from 27th last year to 32nd. It scored poorly in science and technology infrastructure, productivity and education. However, the Kingdom scored highly for the efficiency of government fiscal policy, employment and prices.

South Korea was another Asian country that dropped in the competitiveness rankings, tumbling from 29th to 38th.

Hong Kong and Singapore are catching up with the US because the Swiss foundation says their governments are more "synchronised" with economic performance.

China rose from 31st last year to 19th. India, meanwhile, rose from 39th to 29th.

The IMD ranking takes account of four main factors: economic performance, government efficiency, business efficiency, and infrastructure.

Garelli said on US competitiveness: "There is a striking difference between the achievements of the US economy, which recorded 3.5-per-cent growth in 2005, and the US$318-billion [Bt11.96 trillion] budget deficit accumulated by the federal government and the country's $8-trillion debt.

"Are some governments becoming a burden for competitiveness?" he said. "Italy, France and some Latin American countries seem to be confronted with the same situation. Some governments fail to contribute to the overall competitiveness of their country."

This year, IMD also calculated the biggest negative differences between the contribution of the government and the contribution of the economy to the overall competitiveness of a country.

It said the US and France were the two industrial nations with the biggest difference between the respective performances of their governments and their economies. Budget deficits and debt are running higher in both countries, calling into question the efficiency of the state.

Meanwhile, the US and France remain the second- and fifth-largest exporters in the world, thanks to very dynamic enterprises. In these two countries, business outperforms government, the foundation said.

India and China face similar gaps between government and economic performance, but for different reasons. With growth rates of 8.1 per cent and 9.9 per cent respectively, both governments face the challenge of keeping pace with rapid economic expansion.

IMD said their task now was to meet the standards and expectations of a buoyant economy, and failure to do so could create economic and social imbalances that could jeopardise what has been achieved so far. The lesson here, it says, is: success has a price.