IMD announced its findings on Thursday in the annual World Competitiveness Yearbook, which ranks how successfully countries increase their prosperity by managing their economic and human resources.
The number one spot went to Hong Kong, which received a top score of 100, followed closely behind by the US, Switzerland and Singapore.
Sweden, with a score of 91.4 came in fifth overall, dropping one place from 2011's 4ht place ranking.
Sweden is mentioned in the statement among countries with a positive attitude toward reforms and a positive development toward globalization.
The IMD rankings feature 59 countries and are based on statistics and assessments from business leaders. The results were comprised from a survey of more than 4,200 international executives, and revolved around 329 ranking criteria.
European countries rated highly in the rankings, with Switzerland, Sweden, Norway and Germany coming inside of the top ten, countries which the report explained have export-oriented manufacturing and fiscal discipline.
Another six European countries were ranked in the top 20. Rounding out the top ten were Canada, Taiwan, Norway, Germany and Qatar.
According to the findings, the US rated highly “despite its setbacks” due to its “unique economic power, the dynamism of its enterprises and its capacity for innovation,” wrote IMD.
Meanwhile, the report showed that emerging economies are still suffering turmoil with China at 23, India at 35 and Brazil at 46 having all fallen from 2011's report.