SINGAPORE; Hong Kong has Asia’s most innovative economy, thanks to its high level of creativity and well developed financial markets, a study said.

The Chinese territory beat regional rival Singapore, which was in second place in the Asian rankings, said the joint study by international business school INSEAD and the Confederation of Indian Industry released late on Thursday.

Worldwide, Hong Kong ranked third in the Global Innovation Index while Singapore placed seventh, the study showed.

Among the criteria used by the survey, economies were ranked by patents filed, publication of scientific journals, research and development spending and how innovation supported social welfare, competitiveness and growth.

Hong Kong, Singapore and New Zealand were the only Asia Pacific economies to make it to the top 10 in the global rankings.

Iceland topped the global innovation list despite

its deep economic woes

followed by Sweden, while Switzerland placed fourth

after Hong Kong. Rounding up the global top 10 list

was Denmark in fifth spot,

followed by Finland, Singapore, Netherlands, New Zealand and Norway.

The US, which took the top spot last year, slid down to 11th place amid growing

challenges from other countries which are putting

increasing emphasis on education, science and technology, the study said.

The study stressed innovation as a key driver of growth, playing “a critical role not only in facilitating countries’ recovery but also in sustaining national competitiveness,” it said. “National and business leaders are struggling to balance the near-term needs of survival with the long-term demand to find new sources of growth.”

This year’s Global Innovation Index Report covered 132 economies that account for 96 percent of the world’s gross domestic product.

Japan, Asia’s largest economy, ranked 13th and South Korea was at 20th spot. Australia was in 18th place.

Taiwan was 25th and China, widely expected to overtake Japan as the world’s second biggest economy, placed 43rd on the global index.