Switzerland -- where the Forum is based -- holds down the top spot, in the report, issued on Tuesday. Sweden is rated third, with Denmark in fourth place.
The report praises Finland and the Scandinavian countries for good economic management, high education levels and good social services. Finland is ranked as having the best public institutions in the world.
"Finland, Denmark and Sweden also occupy the top three positions in the higher education and training pillar, where Finland's top ranking is remarkable for its durability over time," the report says.
Overall, Norway and Iceland are in 12th and 14th place respectively.
The United States, which topped the list last year, now drops to sixth place behind Singapore. The Forum criticizes the US for its huge trade deficit and poor general education levels.
The rankings are based on publicly-issued statistics and a survey of 11,000 business leaders in 125 countries.
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