The Bloomberg Innovation Index scores economies using factors such as research and development spending and the concentration of high-tech public companies. The Nordic nations of Sweden and Finland score high, with both nations placing 2nd and 5th respectively.
Finland have made the significant leap into the top five primarily because of the rise of high-tech firms in the region, whilst Sweden owes most of its rise in prominence due to manufacturing value-added metric. Norway another Nordic nation with a healthy economy and industry placed 14th overall.
Director of the Research Institute of Industrial Economics, Magnus Henrekson said despite government policies that could cripple business investment - Sweden has flourished, it credits the super individualistic nature of Swedish people as the reason for this.
He said: "In the culture, people are super individualistic - this means that people have ideas and are very interested in pursuing them in this way in order to become wealthy. The incentives are there and the tax system favors them."
One of the biggest losers in the report commissioned by Bloomberg was Russia who plummeted 14 places to 26th overall. Russia has been battered by sanctions - and now undoubtedly feels the effects of subdued energy prices. Last year, Russia scored solidly in the sectors of manufacturing and productivity, but this year those scores were destroyed in the tally.
The U.S. fell one spot to No. 9, while Israel moved up one notch to No. 10. China held its title as the strongest-ranked emerging market, at No. 21, as it improved its tertiary education score while its high-tech concentration wavered.
The ranking began with over 200 economies, from which those that didn't report data for at least six of seven categories measured were eliminated, trimming the list to 78. Bloomberg released overall and category scores for the top 50 innovative economies.