It says that new companies and new brands are appearing all over the world, highlighting a big shake-up in economic and business power.

However, the director of the IMD's World Competitiveness Centre, Prof Stephane Garelli, warns that the trend could spark an increase in protectionist measures in Europe and the United States.

Of the 55 economies ranked by the IMD, the US still holds the top position, closely followed by Singapore and Hong Kong. However, 40 economies are now increasing or maintaining their competitiveness compared to the US - in other words, they are "closing the gap". Only 15 are losing ground.

Among those losing ground is Thailand, which fell sharply from 29th ranking in 2006 to 33rd this year.

The IMD says that in 2007, Thailand is facing a number of challenges: creating and restoring the confidence of both domestic and foreign investors, improving the competitiveness of its industries, improving logistics costs, building intermediate infrastructure through human resource development and retrained labour, and improving laws and regulations.

While praising Thailand for improvements in government budget deficit, direct investment flows, current-account balance and central government foreign debt, the IMD says the country performed poorly in terms of the government's policy direction.

Among the criteria that declined the most are exchange rates that are less supportive of competitiveness, the impact of central bank policy on economic development, adaptability of government policy to changes in the economy, risks of political instability and ineffective implementation of government decisions.

Commerce Minister Krirk-krai Jirapaet said he was concerned over the erosion of Thai competitiveness, as the Kingdom's rivals are fast catching up.

On the IMD assessment, he said: "We have to look into the details because there are several factors taken into consideration, such as exports, inflation, macro-economic policy, IT development and education."

Pramon Suthivong, chairman of the Board of Trade, admitted that Thailand was losing its competitive edge and that its rivals were catching up fast. "I think that Thailand is losing its competitive edge due to higher labour costs and the stronger baht," he said.

Sukij Kongpiyacharn, vice chairman of the Textile Industry Association, conceded that the lower competitiveness ranking was justified. "Thai competitiveness now is affected by the higher baht and a lack of labour skills," he said.

For the first time, the institute's world competitiveness rankings indicate not only the competitive position of nations in 2007 but also their ability to catch up with the US. These trends are based on past competitive performance, drawn from a comprehensive database on world competitiveness built up by the IMD over two decades

China, Russia, India, the Slovak Republic, Estonia, Sweden, Austria, Australia, Denmark, Switzerland and Hong Kong have displayed a strong improvement in their competitiveness performance in recent years, it says. This does not imply that these nations are already at the top of the competitiveness league. However, they are catching up quickly, and their strong performance will obviously impact future rankings.

On the other hand, Indonesia, Italy, Argentina, Brazil, Mexico, Turkey, the Philippines and France have tended to lose ground compared to the leaders.

The IMD says that despite some real and specific competitive advantages, these nations will sooner or later lose their standing in world competitiveness if they do not improve their overall performance.

It says economic and business power is shifting to new countries. China, Russia and India have together stacked up more than US$1.7 trillion (Bt59 trillion) in foreign currency reserves.

Companies from Southeast Asia, India, China, Russia and the Persian Gulf countries are buying industrial assets the world over.

In all likelihood, the IMD says, industrialised nations will find it hard to tolerate such a power shift. They will not accept the loss of some of their "business jewels" to newcomers without a fight.

The world therefore faces a year of rising protectionist measures and an increase in complaints filed with the World Trade Organisation alleging unfair practices.

But the "new faces of protectionism" will be subtler than in the past. Corporate governance, environmental protection, intellectual property and social rights will be the new key words.

The IMD says that in 2007 and beyond, economic relations will be tenser than ever as emerging markets turn into emerging powers and challenge the established order for competitiveness.