NSW’s sovereign risk rating would have seen its attractiveness suffer after the state government lead by the then Premier Barry O’Farrell repealed an exploration licence to NuCoal Resources to develop the Doyles Creek coal project in the Hunter Valley after corruption watchdog hearings.

The matter is now before the courts.

Finland has now replaced Western Australia as the world’s most attractive jurisdiction with WA falling by four spaces to fifth.

Rounding out the top 10 was Saskatchewan (2), Nevada (3), Manitoba (4), Quebec (6), Wyoming (7), Newfoundland and Labrador (8), Yukon (9), and Alaska (10).

Saskatchewan moved up five spots, while Manitoba moved into the top 10 after ranking 13th last year.

Greenland dropped out of the top 10 this year, plummeting to 41st, while Sweden also dropped out to 12th spot.

South Australia improved one spot to 19th, followed by Queensland, which dropped six places to 27th, the Northern Territory, which fell to 31st from 17th, and Tasmania, down three places to 39th.

New South Wales dropped from 39th to 51st and Victoria fell to 66th from 43rd.

The Minerals Council of Australia called for cuts to red and green tape in the wake of the results.

“If Australia's attractiveness continues to decline, the cost will be borne across the Australian community in slower growth in household incomes, real wages and higher unemployment,” the MCA said.

The MCA said the potential gains from lifting Australia's ranking were considerable.

“Research by BAEconomics has shown that reducing project delays by one full year would add $160 billion to Australia's national income over the period to 2025,” it said.

Meanwhile, Malaysia ranks as the least attractive jurisdiction in the world for investment, which slumped from 70th in last year’s survey due to policy issues.

The remaining bottom 10 starting with the worst were Hungary, Kenya, Honduras, Solomon Islands, Egypt, Guatemala, Bulgaria, Nigeria, and Sudan.

Niger, Uruguay, Kyrgyzstan and four Argentinean provinces improved their results enough to move out of the bottom 10.

Papua New Guinea was named as the jurisdiction with the most room for improvement, followed by Brazil, Santa Cruz in Argentina, Mongolia and Indonesia.

The number of jurisdictions in the survey increased again this year to 122, from 112 last year and 96 the previous year.

Included in the 2014 survey for the first time were the Solomon Islands, the Central African Republic, Egypt, Lesotho, Mauritania, South Sudan, Sudan, Uganda, Cambodia and Hungary – several of which were considered the worst countries for investment.