87.8% of Swedes are internet users
Sweden is the world's most networked economy, beating Singapore (2nd), Denmark (3rd), Switzerland (4th) and the United States (5th).
The World Economic Forum and INSEAD business school compared 133 developing and developed countries, representing 98% of the global economy.
Sweden scored highly on infrastructure, education and "friendly" regulation.
Individuals in Sweden are also rated top for use of the internet with a high penetration of PCs and broadband.
Nordic economies did well overall with Denmark in third place, Finland sixth, Norway 10th and Iceland in 12th place.
China climbed nine places to 37th in the rankings and India improved 11 places to 43rd. Russia fell six places to 80th.
Irene Mia, World Economic Forum senior economist, said the challenges for these countries related to the size of their market and the quality of infrastructure that needed to be upgraded.
"There are also problems of digital divide, with penetration rates that are still quite low by international standards," she said.
The report argued that the information and communications sector was weathering the downturn well.
Firms, even in struggling sectors of the economy, have turned to technology to increase automation levels and reduce costs.
And although some sub-sectors, such as semiconductors, have suffered because of decreased consumer demand, social networking and smart phones are making the world more connected than ever before.
The sector has also developed innovative solutions to diminish energy consumption and improve overall sustainability across industries.