Canada has slipped to the bottom of the top 10 most competitive countries in the world, despite being considered one of the bright lights during the recent recession, a new report from the World Economic Forum said Thursday.

The report, which looks at 139 global economies and ranks them based on their productivity and ability to compete, bumped Canada down one spot to 10th from 9th a year ago citing a "stable" performance in the past year.

"Improving the sophistication and innovative potential of the private sector, with greater R&D spending and producing higher on the value chain, would enhance Canada's competitiveness and productive potential going into the future," the report said.

Since losing the top spot to Switzerland last year, the United States has dropped a further two spots to fourth as the country grapples with massive debts, weakness in both the public and private sectors, and uncertainty in its financial markets.

Switzerland leads the rankings again in 2010, followed by Sweden and Singapore.

Germany, Japan, Finland, the Netherlands, Denmark and then Canada round out the rest of the top 10.

China, at 27th, leads the way among developing countries.

Chad, a landlocked country in central Africa, holds the last spot on the list.

Jim Flaherty, Federal Finance Minister, highlighted the fact Canada's banks were ranked the soundest in the world for the third year in a row.

"Even during the worst days of the credit crisis, our financial institutions' health allowed them to continue to raise capital," he said in a statement. "It's no wonder that international leaders around the world praise Canada's financial system as a model for others to emulate."

Canada also placed second for availability of financial services.

However, the most common complaints among business leaders surveyed for the report included tax rates (18% of respondents), access to financing (15.4%) and inefficient government bureaucracy (13.2%).

The list is based on a Global Competitiveness Index developed by Xavier Sala-i-Martin, a professor of economics at Columbia University who co-authors the report.

The index has 12 components of competitiveness, including institutions, infrastructure, health and education, macroeconomic environment, sophistication and innovation.

The report's authors also surveyed more than 13,500 business leaders in the 139 economies.