"Despite the country's large market size and improving macroeconomic management, Russia places 58th below other large European countries," the World Economic Forum's Global Competitiveness Index said
The country's low position is mainly due to "weaknesses in its institutional environment and business standards, lack of government efficiency, lack of independence of the judiciary in meting out justice, and more general concerns about government favoritism in its dealings with the private sector," the report said.
The ranking is based on data available to the Geneva-based World Economic Forum, and the assessments of forum members. The forum holds a meeting of top business and political leaders once a year in Davos, Switzerland.
The ranking is based on 12 "pillars of competitiveness" - institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.
The report also said the "environment for the protection of property rights is extremely poor and worsening" in Russia.
However Russia, which ranked 62nd in 2006, has gained 4.19 points this year against 4.07 last year. It is preceded by Croatia and followed by Panama in the rankings.
GLOBAL COMPETITIVENESS LEADERS
The United States, Switzerland, Denmark and Sweden took the top spots in the Global Competitiveness Index.
The U.S. climbed to first position from sixth last year. Forum experts said: "the country is endowed with a winning combination of highly sophisticated and innovative companies operating in very efficient factor markets."
"This is buttressed by an excellent university system and strong collaboration between the educational and business sectors in research and development. These characteristics, combined with the scale opportunities afforded by the sheer size of its domestic economy, come together to make the United States arguably the country with the most productive and innovative potential in the world," the report said.
However, "a number of weaknesses in more basic areas, particularly related to macroeconomic imbalances and some aspects of the institutional environment, continue to pose a risk to the country's overall competitiveness potential," the document said.
FORMER SOVIET REPUBLICS - LEADERS AND OUTSIDERS
Most former Soviet republics are included in the rankings, but their positions vary greatly.
Estonia, ranked 27th, emerged as the leader among ex-Soviet republics, ahead of its Baltic neighbors and some central and western European nations. Forum experts attributed the progress to "the efficiency of Estonia's government institutions, the excellent management of public finances and its aggressiveness in adopting new technologies."
The other two Baltic states, Lithuania and Latvia, ranked 38th and 45th, respectively.
All other former Soviet republics are placed below Russia. Kazakhstan, whose economy is widely considered the best developed in the Commonwealth of Independent States, came 61st followed by Uzbekistan (62nd). Azerbaijan, which has seen the highest economic growth in the ex-Soviet space in the past two years thanks to new oil projects, ranked 66th.
Ukraine, whose authorities have repeatedly declared favorable business environment as their priority, ranked 73rd, and Georgia 90th.
Armenia (93rd), Moldova (97th), Tajikistan (117th) and Kyrgyzstan (119th) were placed toward the bottom of the list. Turkmenistan and Belarus were left out of the rankings as the most closed economies to foreign investors.
