In releasing the Australian results, CEDA Chief Executive, Professor the Hon. Stephen Martin said improvements in the economies of the UK and Ireland, who are still recovering from the GFC, have pushed Australia further out in the rankings in the last two years.
"Discussion about Australia's economic future has generally been about how we compete with low cost emerging economies, but these results clearly show the threat to our economy and international competitiveness is also coming from mature or advanced economies," he said.
"In the last five years Australia has slipped from five to 17, a drop of 12 spots.
"While the pace of Australia's backward slide has slowed in the last two years we shouldn't be complacent because countries that were more severely affected by the GFC are recovering."
Noticeably, Australia's ranking has been stable at five for the past three years in the Asia Pacific Region.
The rankings are part of Switzerland based IMD's 2014 World Competitiveness Yearbook, compiled from statistical data and a survey of senior business people in each country gathered in March each year. CEDA is the Australian partner for the yearbook.
Professor Martin said the key areas identified in the survey where Australia needs to improve include our research and development (R&D) culture, creating a competitive tax regime and effective labour relations.
"R&D and a competitive tax regime are both areas CEDA has identified through its research and clearly this report confirms these issues as critical to Australia's future competitiveness," he said.
"Australian governments and industry need to focus on driving a culture of R&D and innovation to improve both our international perception in these areas and to help us move away from a culture of handouts.
"Australia potentially stands as becoming the dumb white trash of Asia unless governments realise the importance of education and R&D as a critical component of improving international competitiveness.
"To improve tax competitiveness broadening the base or raising the rate of the GST should be debated and the company tax rate needs to be further reduced to an internationally competitive level.
"The proposed reduction in the company tax rate to 28.5 per cent in the Federal Budget is a step in the right direction but it does not go far enough if we want to continue to attract capital from aboard for private sector projects such as infrastructure.
"There are cogent economic arguments as to why this rate should be much lower, and applied much earlier to stimulate our global competitiveness."
In some positive signs, the results show that the change of Federal Government last year has improved the perception of stability and government efficiency. However, the survey statistics were collected prior to this month's Federal budget.
Australia ranked well in terms of our skilled labour and education level. However, proposed changes to education in this month's Budget with the scrapping of the Gonski reforms and deregulation of university fees may have different consequences in the future.
Overall the US retained the number one spot in the rankings reflecting its continued recovery and improved employment numbers, followed by Switzerland, Singapore and Hong Kong. Europe also fared better due to its gradual recovery.
Many of the big emerging economies including China, India and Brazil all fell in the rankings due to slowing economic growth and inadequate infrastructure.
The 2014 World Competitiveness Yearbook is produced by the Switzerland-based IMD's World Competitiveness Center with the help of CEDA in Australia and other international partners.
The IMD World Competitiveness Yearbook compares and ranks 60 countries on business competitiveness criteria and is the world's most renowned and comprehensive annual report on the competitiveness of nations.
CEDA – the Committee for Economic Development of Australia – is an independent, not-for-profit membership organisation.