Entrepreneurship and innovation are critical factors that determine the overall economic health of a country, according to the 2009 Legatum Prosperity Index.

The index, which considers both material wealth and quality of life when evaluating the prosperity of nations, ranks 104 nations that account for 90 per cent of the world's population.

The research found that no factor in a society is more closely related to economic fundamentals than entrepreneurship and innovation. To create a stability and growth in an economy overall, nations need a business friendly environment that supports business start-ups and innovation.

Canada ranked 7th overall in the 2009 Index, receiving top marks for personal freedom (#3) and entrepreneurship and innovation (#4). Our worst ranked categories were health (#22) and education (#16).

In comparison, the United States ranked 9th overall, but still took the top spot for entrepreneurship and innovation and ranked 2nd for democratic institutions.

The U.S. also scored well ahead of Canada for education (#7), but fell behind Canada for health (#27), safety and security (#19) and governance (#16).

The top ranking country overall was Finland, which landed a top 10 position in all categories.

The five lowest ranking countries were Cameroon (100), Central Africa Republic (101), Yemen (102), Sudan (103) and Zimbabwe (104).

View the 2009 Legatum Prosperity Index rankings.

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