SA HAS managed to rise one notch to 42 in the overall rankings of the World Competitiveness Yearbook.
The annual review, which ranks 49 economies, is produced by the International Institute for Management and Development, a Swiss business school.
It assesses a nation's competitiveness on the basis of economic performance, government efficiency, business efficiency and infrastructure.
To reach the average position of 34 in the rankings, SA would, among other improvements, have to substantially cut unemployment, reduce the number of industrial disputes, beef up skills, raise the pupil-to-teacher ratio and ensure less discrimination.
SA is ranked at top position in two categories. According to the institute, it supplies the cheapest electricity to industrial clients of all the countries surveyed. And another positive for SA competitiveness is that it is not compulsory for firms to make a social contribution for employees.
SA was ranked second in a category called "price", reflecting the relatively low cost of a basket of goods and services.
The US is ranked first in the overall rankings with a score of 100, and Singapore, Finland, Luxembourg and the Netherlands fill the other top five places.
The results show that the size of an economy has little to do with its competitiveness. Japan, the world's second largest economy, ranks 26th.
Countries are scored on 286 criteria, most of which are based on publicly available statistics.
However, some of the criteria are based on surveys of local business. Governments are often sensitive to criticism from local business and sometimes argue that their inclusion can lead to a bias in the country's rating.
The institute says this is done because it is difficult to find people with the relevant expertise. In order to be as objective as possible, the institute says it surveys local and foreign enterprises operating in a country.
For the local survey, the National Productivity Institute surveyed 200 people in the country, which it says was a representative sample. That includes empowerment groups and government departments and organisations. A spokesperson for the National Productivity Institute said 33 government officials were included in the survey.
But yearbook practice is not to include government officials and to survey only top- and middle-level business management.
The survey's findings give no indication of bias as a result of the inclusion of government officials, as SA was close to the bottom of the list on certain aspects of government efficiency.
These questions cover issues such as threats to personal security and the ability of the immigration system to respond to business needs.
In the past year the institute says it has changed the methods for ranking countries to better reflect the opening of economies and technological change.
It says that competitiveness is now not only about a country making itself a location for business, but also about attracting the best brains.
