Singapore has fallen five rungs to 15th place in a global ranking of an economy's ability to nurture and attract business talent.
The country's slide over the past year was driven mainly by its failure to invest sufficiently in both primary and secondary education, according to the annual report by Swiss business school IMD.
Hong Kong replaced Singapore in the No. 10 spot.
The rankings were based on three main categories - education, appeal of the country to talent and how work-ready people are.
The education category, which was measured mainly by the amount of money invested, was Singapore's weak spot. It invests a relatively small amount of national output or gross domestic product (GDP) in public education, with a ranking of 56 in this area.
In fact, total expenditure on education was just 2.99 per cent of GDP last year, down from 3.08 per cent in 2014, the report said.
In contrast, Hong Kong spent 3.26 per cent of GDP on education last year, which works out to 18.68 per cent of GDP per capita on each secondary school student.
Singapore spent 16.68 per cent of GDP per capita on each secondary school student last year.
Professor Arturo Bris, director of the IMD World Competitiveness Centre, told The Straits Times: "Singapore's reduction in investment in public education relative to last year was not big, but because many other countries invested more in education over the year, they overtook Singapore in the rankings."
He noted that many European countries like Switzerland occupied the top of the charts. In general, European nations have boosted their investment in physical and intangible infrastructure such as education after the European debt crisis receded in 2014, he said.
Switzerland kept its place as the most talent-competitive country this year, followed by Denmark and Belgium while Venezuela was last of the 61 economies assessed.
But Prof Bris noted that education investment alone does not determine an economy's ability to groom talent, a classic example being the United States, which pumped a whopping 6.2 per cent of GDP into public education last year but with uncertain results.
Another reason why Hong Kong overtook Singapore was that it was more proactive in adapting its education to suit labour market needs, said Prof Bris.
He was more sceptical of the Singapore education system's responsiveness to changing economic conditions, saying: "I wonder to what extent we can claim this country is focusing on certain skills because they are fashionable."
But Singapore Business Federation (SBF) chairman Teo Siong Seng, a member of the SkillsFuture Council chaired by Deputy Prime Minister Tharman Shanmugaratnam, is more hopeful, saying: "Singapore is not slow, we just want people to be on board. It takes time for people to recognise the need for increased training.
"Until the recent economic slowdown, we had full employment, so it was difficult to convince people to go for training."
And the Ministry of Education said: "Government expenditure in education has doubled over the last decade. The pupil-teacher ratio has also improved over the past five years."
It added that it is committed to providing students with a wide range of opportunities to help them discover their talent, and develop skills and knowledge in areas such as science and technology, humanities and the arts - "all of which are needed in our diverse economy".
