The US has lost its position as the world's primary engine of technology innovation, according to a report by the World Economic Forum.
Singapore was among the nations ranked higher than the US
The US is now ranked seventh in the body's league table measuring the impact of technology on the development of nations.
A deterioration of the political and regulatory environment in the US prompted the fall, the report said.
The top spot went for the first time to Denmark, followed by Sweden.
Countries were judged on the integration of technology in business, the infrastructure available, government policy favourable for fostering a culture of innovation and progress and leadership in promoting the usage of the latest information technology tools.
The Networked Readiness Index, the sixth of its kind published by the World Economic Forum with Insead, the Paris-based business school, scrutinised progress in 122 economies worldwide.
Despite losing its top position, the US still maintained a strong focus on innovation, driven by one of the world's best tertiary education systems and its high degree of co-operation with industry, the report said.
NETWORKED READINESS INDEX RANKINGS 2006 (2005)
1: Denmark (3)
2: Sweden (8)
3: Singapore (2)
4: Finland (5)
5: Switzerland (9)
6: Netherlands (12)
7: US (1)
8: Iceland (4)
9: UK (10)
10: Norway (13)
The country's efficient market environment, conducive to the availability of venture capital, and the sophistication of financial markets, was also given recognition.
Denmark is now regarded as the world leader in technological advancement, with its Nordic neighbours Sweden, Finland and Norway claiming second, fourth and 10th place respectively.
"Denmark, in particular, has benefited from the very effective government e-leadership, reflected in early liberalisation of the telecommunications sector, a first-rate regulatory environment and large availability of e-government services," said Irene Mia, senior economist at World Economic Forum.
European countries to make the top 20 included Switzerland in fifth place, the Netherlands, one of the most improved in sixth, the UK (nine), Germany (16), Austria (17) and Estonia (20).
While countries from Asia and the Pacific continued to progress, the powerhouse economies of China and India both showed a downward trend.
India was four positions down on last year to 44th, suffering from weak infrastructure and a very low level of individual usage of personal computers and the internet.
China was knocked to 59th place, nine positions down, with information technology uptake in Chinese firms lagging.