In 2007, Australia's economic infrastructure continued to present a challenge to improved relative economic performance.

Of 55 national economies, Australia ranks 12th overall in 2007, down from sixth in 2006.

However, these results are distorted by one large foreign investment transaction, the 2005 change in domicile of News Corporation from Australia to the US. News Corporation's move led to a one-off fall in Australia's international investment and economic performance rankings. CEDA and the IMD agree that Australia's 2007 ranking has been distorted by this change.

The US ranks number 1, followed closely by Singapore and Hong Kong. The Yearbook also shows that many of the 55 tracked countries - including Australia - are closing the performance gap with the US. Among the countries making the fastest progress are China, India and Russia.

Reform of education, encouraging business innovation and boosting investment in infrastructure are key challenges for Australia in 2007.

Infrastructure: science and technology lag

Australia scores poorly on Internet costs (42nd) and mobile telephone costs (38th) and on availability of various types of skilled labour, including availability of qualified engineers (40th).

While the nation ranks fifth out of 55 countries for basic infrastructure, it ranks only 12th for education, 20th for scientific infrastructure and 21st for technological infrastructure.

In a survey of businesspeople for the Yearbook, Australia ranks 36th on the ability of the nation's communications technology to meet business needs.

Overall, Australia ranks 16th on economic infrastructure, just up from 2006's 17th position.

Government: still efficient

Australia's government framework remains one of the strongest of the countries surveyed, but the nation's government efficiency ranking has dropped from second to seventh since 2004.

Personal income taxes and corporate taxes continue to be relatively high by world standards, though in line with those of other highly developed economies - Australia ranks 36th out of 55 for both types of tax burden.

However, the businesspeople surveyed for the Yearbook rank Australia's political parties highly for their understanding of the country's economic challenges (third out of 55). They also rate the consistency of the government's policy direction highly (4th out of 55).

2007 rankings

Overall economic competitiveness rankings from the 2007 World Competitiveness Yearbook. For the top-ranked 20 nations, 2006 rankings (out of 61 countries and regions) are in brackets.