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AUSTRALIA has jumped three places to become the fourth most competitive economy in the world according to the latest IMD world competitiveness rankings.
The United States was again rated the most competitive economy in the world, followed by Singapore. Australia came in fourth behind Canada, which also jumped three places, according to the report. It is produced annually by the independent, not-for-profit research foundation IMD, based in Switzerland.
The most recent improvement masks serious economic challenges still outstanding, David Edwards, chief executive of the committee for the Economic Development of Australia, said.
"The 2004 (result) reveals that the international orientation of the Australian economy is relatively weak, particularly in the area of high-tech exports," Mr Edwards said.
"A number of indicators of innovation are also weak."
Good scores for government and business efficiency, along with an unusually fast rate of growth compared to other developed economies, helped offset those factors in the ranking calculations.
"Australia is showing impressive resilience and has sustained growth over 3 per cent during five of the past six years," IMD found.
High mobile phone charges, a relatively poor take-up of broadband technology subscription and weak business research spending were other drags.
Australia must boost its innovation performance to avoid losing out in the emerging hi-tech, science-based industries, according to CEDA.