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ndonesia may have the largest economy in Southeast Asia and the nation may be a member of the G20 – but it is not one of the most competitive economies in the world, according to the World Competitiveness Yearbook (WCY) rankings for 2012.

Indonesia was ranked 42nd of a field of 59 countries in 2012, dropping from 37th place in 2011, in this year’s report compiled by the IMD’s World Competitiveness Center in Switzerland.

Despite the government touting sustained 6 percent economic growth rates, rising exports, low inflation, large foreign exchange reserves, investment-grade ratings for its sovereign debt, increased foreign direct investment, low debt and declining poverty and unemployment, Indonesia’s new competitiveness ranking shows that the above trends have not contributed to national prosperity and that the fruits of economic growth have not trickled down to the masses.

The nation’s Southeast Asian neighbors Malaysia, in 14th place, and Thailand, in 30th place, both figured higher than Indonesia in the rankings.

However, the nation’s standing in the World Economic Forum’s global competitive rankings was more impressive: Indonesia was ranked 44 of 239 countries in 2010-2011 index, a huge jump from 69th place in 2005.

The leap followed President Susilo Bambang Yudhoyono’s personal interest in boosting perceptions of the nation’s competitiveness.

In 2007, Yudhoyono asked the help of then Swiss president Micheline Calmy-Remy, whose country ranked number 1 in 2007, in improving Indonesia’s standing.

The next year, Yudhoyono sent a team to Switzerland to study how a such small country could top the rankings.

The team suggested several reforms, some of which were implemented with amazing results: There has been continuous improvement in Indonesia’s competitiveness rankings.

“We hope in the coming two or three years, Indonesia`s competitiveness rating will increase and come in at better than 40th” then trade minister Mari Elka Pangestu said on the sidelines of the World Economic Forum - East Asia (WEF - EA) meeting in Jakarta in 2011.

The IMD center determines rankings by measuring how well nations manage economic and human resources to enhance prosperity.

According to the IMD, one-third of the 329 ranking criteria came from an exclusive survey of more than 4,200 international executives, which reveals growing skepticism in some of the 59 economies on globalization and the need for economic reform.

Hong Kong was the most competitive economy in the world, scoring a perfect 100, according to the World Competitiveness Yearbook. Other top competitive nations include the US, Switzerland, Singapore, Sweden, Canada, Taiwan, Norway, Germany and Qatar.