The annual index is developed by the Switzerland-headquartered business school IMD and ranks each of the countries based on analysis of more than 340 criteria derived from four principal factors: economic performance; government efficiency; business efficiency; and infrastructure.
It also considers responses from an in-depth survey of more than 5,400 business executives, who are asked to assess the situation in their own countries.
Apart from Qatar and the UAE, other Middle Eastern countries included in the index are Israel (21st), Turkey (38th) and Jordan (53rd). Some of the regions largest economies, such as Egypt and Saudi Arabia, are not included in the index.
Arturo Bris, director of the IMD World Competitiveness Centre, said that while nations such as China (mainland) and Qatar fare very well in terms of economic performance, they remain weak in other pillars such as government efficiency and infrastructure.
Hong Kong toppled the US to take the top spot in this years competitiveness ranking. The US fell to third position, with IMDs home country settling for second. Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada complete the top 10.
Bris said a consistent commitment to a favourable business environment was central to Hong Kongs rise. The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions, he said.
Qatar expects to record its first budget deficit in 15 years in 2016 because of lower oil prices. However, as the 2022 Fifa World Cup approaches, infrastructure linked to the event, such as the Doha Metro, stadiums and the expansion of the airport, are continuing to see steady progress and are expected to be the driving force behind economic growth over the next four years.