Long the unchallenged global leader in innovation and competitiveness, the United States now ranks No. 6 among the 40 most developed economies, according to a report published on Wednesday.

The report from Washington, D.C., think tank Information Technology and Innovation Foundation comes a day after U.S. President Barack Obama offered details of his administration’s plan to combat a worsening recession. (Group Asks Obama for $30B Tech Stimulus)

The United States now lags behind Singapore, Sweden, Luxembourg, Denmark, and South Korea in that order and placed dead last among the top 40 economies in terms of competitive growth.

Nations that once competed almost exclusively on price are now making bold innovative strides as a way to attract higher-value and higher-revenue business, the report said.

The report, titled “The Atlantic Century Benchmarking U.S. an EU Innovation,” runs counter to most global studies on competitiveness that tend to place the U.S. at the top.

The ITIF said it measured a number of factors, including entrepreneurship, innovation capacity, and IT infrastructure along with traditional factors such as economic performance and human capital.

“Unlike other reports that evaluate a country’s economic structure or policy factors or economic performance alone, this study is based on a recognition that all these factors must be considered together” the report said. (Tech Plan for Obama and McCain)

The European Union did worse that the United States.  The EU-15 ranked No. 18 as a group although individual member nations Sweden, Luxembourg, and Denmark did better than the United States.

But while the United States ranked dead last in  rate of improvement, the EU-15 finished No. 29. If the progress rate remains unchanged, the report said, the EU-15 will surpass the United States by 2020.

The United States has been the world’s innovation engine for so long that the government spent very little effort developing an economic framework around the country’s competitiveness, the report said.

“The United States didn’t have a strategy before and it did just fine, the thinking goes, there is no need develop and implement a national economic development or competitiveness strategy,” the report said.

But other countries are now at least closing the gap so it is time for the United States to come up with a detailed competitiveness agenda, the report said. (Will Tech Blow $40B Stimulus?)

The report came up with a number of areas that need improvement including federal funding of R&D, IT investments in areas such as health care, and liberal immigration rules for high-skill candidates.

The ITIF was one of the tech groups that lobbied the federal government heavily and successfully for tech stimulus grants for improved broadband, a smart power grid, and a nationwide health IT network.