New Zealand has improved its global competitiveness ranking and extended its lead over Australia, according to an annual survey by the World Economic Forum.
The country is ranked 17th on the Global Competitiveness Index, up one place from last year when it broke into the top 20 for the first time. This is New Zealand's highest position to date, and represents an overall improvement of eight places since 2012.
In contrast, Australia's highly restrictive labour markets continued to drag on the country's competitiveness ranking, which slipped one place to 22 - well short of the 15th position it occupied in 2009.
Dr Oliver Hartwich, executive director of the New Zealand Initiative which helped compile the survey data, said the continued improvement reflected the strength of New Zealand's institutions and regulatory settings, particularly in the education, health and labour sectors.
"The investments that this country has made over time into things like the rule of law, property rights and flexible labour markets are paying dividends now, and the results can be seen in our high rate of GDP growth," he said.
The report emphasised the need to continue investing in the factors that contributed most to business competitiveness, and not to take the complacent attitude to economic reform seen in Australia over the past few years, growth, Hartwich said.
"This country has huge economic opportunities sitting right on our doorstep with the emergence of Asian economies such as China, Indonesia and Malaysia onto the world stage," he said.
"If we want to grasp these opportunities and improve the lives of everyday New Zealanders, we need to not only double down on the areas where we are strong, but also focus on where we are weakest, such as the quality of our business networks and infrastructure investment."
Several other factors could also boost the country's competitiveness, such as unpicking the restrictions on foreign direct investment, freeing up capital for investment by tackling the housing affordability crisis, and reducing bureaucratic red tape, Hartwich said.
The annual Global Competitiveness Report is compiled from 111 indicators, categorised into 12 pillars of competitiveness in four main sub-indices: basic requirements, efficiency enhancers, and innovation and sophistication factors.
New Zealand scored strongly in basic requirements but didn't do so well in innovation and sophistication factors.
The most competitive country was Switzerland, followed by Singapore, the United States, Finland, Germany, Japan, Hong Kong, the Netherlands, United Kingdom, and Sweden.
African nation Guinea was the least competitive of the 144 countries in the survey, beating out Chad and Yemen for the dubious distinction.