The improvement in Slovenia's ranking on the index compiled by the Swiss-based International Institute for Management Development (IMD) came on the back of better economic performance and government efficiency, although the country continued to be held back by a number of pre-existing limitations.

"The positives and negatives have not changed much," said Peter Stanovnik of the Institute for Economic Research, the Slovenian partner of the IMD, in presenting the results.

The country made the biggest jump in economic effectiveness and productivity, where it rose as many as 14 places. In government efficiency, the country rose six spots on the back of better public finances and political stability.

Slovenia continued to be graded highly on infrastructure, gaining six places in basic infrastructure, ranking 30th in terms of infrastructure overall. "Despite a lack of major investment in traditional infrastructure...this is the field where Slovenia performs best," said Stanovnik.

Meanwhile, the annual survey by the IMD found that some of the chronic limitations remain, with business effectiveness remaining a key challenge, as the country ranked 53rd in this respect.

Corporate governance, a lack of openness to foreign ideas, and lack of flexibility for dealing with new challenges are key problematic issues. The labour market also struggles with a lack of flexibility and brain drain.

Stanovnik said that recent staffing issues at the NLB bank reflected continuing problems in corporate governance, especially at state-owned companies.

Ownership of companies and speed of privatisation is an ongoing issue, as is indebtedness of the corporate sector. In banking, regulation and access to loans all require improvement.

Slovenia's main competitive advantages remain a highly educated workforce and reliable infrastructure, said Sonja Uršič of the Institute of Economic Research.

The country has also advanced with the help of research and development. "This is an important competitive advantage for Slovenia: compared to other countries in central and eastern Europe...this is an area where Slovenia ranks better."

Measures which would help Slovenia make further inroads in competitiveness include lowering of the tax burden on labour and pension reform, said Stanovnik.

The implementation of the Smart Specialisation Strategy is also essential in addressing key lacking areas. Efficiency at public and private institutions must be improved and the country should continue fiscal consolidation measures, the report finds.

Slovenia continues to strive to attract foreign investment, attracting EUR 800m of foreign direct investment last year, after bringing in EUR 1.5bn the year before, said Matej Skočir of the Spirit investment promotion agency.

However, much of that came on account of privatisation and the sale of claims by the bad bank, rather than the more desired greenfield and brownfield investments.

In a bid to facilitate the latter investments, Spirit is preparing new calls for applications to award grants for first capital investments by foreign investors, said Škočir.

In global terms, Hong Kong took top spot in economic competitiveness, leapfrogging the US, which slipped to third. Second place on the scoreboard of 61 developed economies was taken by Switzerland.

In eastern Europe, the Czech Republic leads the pack in 27th place.