We’ve seen entire industries fall during this recession, and even a sector as apparently insulated as technology took a good hit. So is the U.S. still the top place for innovation? Yes it is, according to the London-based Legatum Institute’s 3rd annual Prosperity Index, which ranked the U.S. number one globally in its Entrepreneurship and Innovation category. Legatum’s Prosperity Index is a measure of countries’ wealth and well-being; it purports to account for 90 percent of the world’s population and is based on the analysis of years of data and surveys. In all, the Institute bases its conclusions on 79 key variables.

For economic well-being, Entrepreneurship and Innovation is one the key categories a country needs. Indeed, there is a strong correlation between Entrepreneurship and Innovation and a nation’s economic fundamentals.

“Innovation and entrepreneurship are more strongly related to economic fundamentals than any other factor in a society,” according to Legatum. “Aspiring entrepreneurs will often hit a ‘ceiling’ limiting their success if a nation’s economy is not fundamentally strong.”

“A key part of a country’s capacity for entrepreneurship is its ability to commercialize new ideas and create markets for innovative products,” according to Legatum. “The ability to start and run new enterprises is an obvious, important aspect of a country’s approach to fostering innovation.”

Entrepreneurship and Innovation is one of nine categories that Legatum uses to gauge a nation’s wealth and wellbeing. The others are Economic Fundamentals, Democratic Institutions, Education, Health, Safety and Security, Governance, Personal Freedom and Social Capital.

Following the U.S. on Legatum’s Entrepreneurship and Innovation list are:

2 United Kingdom
3 Sweden
4 Canada
5 Netherlands
6 Denmark
7 Japan
8 Germany
9 Finland
10 Hong Kong
11 Singapore
12 Ireland
13 Switzerland
14 France
15 Australia
16 South Korea
17 Norway
18 New Zealand
19 Austria
20 Belgium
21 Taiwan
22 Hungary
23 Israel
24 Estonia
25 Spain

The top country on Legatum’s Prosperity Index was Finland, while the United States ranked 9th overall.

By Mark Alvarez