The Gulf state, which won the rights to host the 2022 World Cup since the last report, was ranked 14th in the list, climbing three places.
Qatar, which is forecast to have one of the world’s fastest growing economies this year, was joined in the top 20 by Saudi Arabia, which rose four places to 17th position.
The UAE fell two places to 27th despite being seen as a safe haven amid the uprisings associated with the Arab Spring during the first half of 2011.
The sultanate of Oman, which has seen protests in its main cities, rose two places to 32nd while Kuwait rose one place to be ranked 34th.
Bahrain, the Gulf country worst hit by uprisings, retained its position at 37th.
But Egypt slipped 13 places to 94th – the biggest decline of any of the countries covered in the study – following the revolution earlier this year.
Overall, Switzerland topped the rankings while Singapore overtook Sweden for second position.
Despite the Euro zone’s recent financial crisis, northern and western European countries dominated the top 10 with Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th) and the United Kingdom (10th).
Japan remained the second-ranked Asian economy at 9th place, despite falling three places since last year.
The United States continued its decline for the third year in a row, falling one more place to fifth position.
Yemen, which has been gripped by political and social unrest for months, was ranked 138th with only Angola, Burundi, Haiti and Chad below it in the list.
The overall results showed that while competitiveness in advanced economies has stagnated over the past seven years, in many emerging markets it has improved, placing their growth on a more stable footing and mirroring the shift in economic activity from advanced to emerging economies.
The People’s Republic of China (26th) led the way among large developing economies, improving by one more place and solidifying its position among the top 30.
Among the four other BRICS economies, South Africa (50th) and Brazil (53rd) moved upwards while India (56th) and Russia (66th) experienced small declines.
Klaus Schwab, founder and executive chairman of the World Economic Forum, said: “After a number of difficult years, a recovery from the economic crisis is tentatively emerging, although it has been very unequally distributed: much of the developing world is still seeing relatively strong growth, despite some risk of overheating, while most advanced economies continue to experience sluggish recovery, persistent unemployment and financial vulnerability, with no clear horizon for improvement.”
The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI).
The GCI comprises 12 categories, which include: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.