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North America and its universities are losing their stranglehold on the global knowledge economy, according to the 2008 edition of the World Knowledge Competitiveness Index.

The ranking, which is published by the University of Wales Institute, Cardiff (UWIC), shows that although the US remains a dominant force in the knowledge economy, emerging powers in Europe and East Asia are becoming increasingly competitive with the help of their universities.

"This year's index highlights the emergence of a new world order of the most competitive knowledge bases," said Rob Huggins, a researcher at UWIC's Cardiff School of Management.

He said that both Beijing and Shanghai, for example, now take the roles of universities as drivers of knowledge-based economic development "very seriously", with the introduction of a range of policies to stimulate higher education knowledge transfer in these regions.

"There are now more than 20 companies listed on the Chinese stock markets that are spin-offs from Chinese universities," he said.

The index seeks to measure the "knowledge capacity, capability and sustainability" of regions by using 19 benchmarks, including the number of patent registrations, education expenditure, access to private equity and investment in research.

Stockholm and Tokyo now sit in the top ten, while Singapore, Kyoto and Taiwan have moved rapidly up the rankings to th, 43rd and 53rd place, respectively.

In Europe, regions in Finland, Sweden, Denmark and the Netherlands all gained in competitiveness, but London slid 46 places to 102nd. In the US, New York, Atlanta, Washington and Austin also moved down the table.

Mark A. Emmert, vice-chair of the World Universities Network and president of the University of Washington, said: "We American communities have to stay aggressive. Research universities around the world are now seen as essential drivers of the knowledge economies. They are the game changers for cities and for nations."

But Richard Brown, chief executive of the Council for Industry and Higher Education, said the measurements used by the index were too selective and "old-fashioned".

He said the indicators relate more closely to information technology and manufacturing than to the "knowledge-intensive service sectors" that are starting to dominate economies like the UK's. "Morgan Stanley in London is just as knowledge intensive and research orientated as Rolls-Royce," he said.

"The authors also do not seem to appreciate that ... businesses can access world-class research from anywhere. They do not have to sit next to a university to do so."

hannah.fearn@tsleducation.com.