A new study ranks the U.S. 10^thout of 110 countries in a worldwide assessment of wealth and quality of life.Norway,Denmark, andAustralialead the rankings.Chinaimproved on economic indicators - moving ahead of the U.S. for the first time - and places 52^ndoverall.

The Legatum Prosperity Indexprovides the world's only global assessment of national prosperity based on both wealth and well-being. The Index assesses 110 countries (accounting for over 93% of the world's population and 97% of the world's GDP) and ranks them based on their performance in eight sub-indices, including Economy, Governance, Personal Freedom, and Social Capital.

"The Prosperity Index allows us to see the way nations perform on globally significant factors,"saidFareed Zakaria, host of CNN's flagship international affairs programFareed Zakaria GPS, at the event launching the Index inWashington, D.C.on Tuesday."Our dominance is being eroded by the rise of the rest. TheU.S.will have to hustle, or fall further in such rankings."

The U.S. ranks high in categories such as Health (1^stoverall) and Entrepreneurship & Opportunity (5^th), but has fallen behindChinafor the first time on the Economy sub-index (U.S. 18^th;China10^th). The Economy sub-index measures the performance of countries in four areas that are essential to promoting prosperity: macroeconomic policies, economic satisfaction and expectations, foundations for growth, and financial sector efficiency.

"We want to assess the long term drivers of prosperity,"saidJeffrey Gedmin, President and CEO of the Legatum Institute."The Prosperity Index is designed to be a practical tool for researchers, policy makers, media, and the interested public. We hope this year's findings will contribute to the conversation about what makes societies healthy and successful."

The U.S. has dropped on the Entrepreneurship sub-index due to slightly higher start-up costs for businesses, uneven economic development, a decrease in research & development expenditures. In the Governance sub-index, the U.S. lost ground due to a drop in citizens' confidence in federal government, the honesty of elections, and in the judicial system.

"Some countries are catching up fast, but the Prosperity Index gives us reason not to despair," said Zakaria."Look at where countries likeIndiaandChinastill are. But theU.S.will have to break out of its deadlocked political system and make choices that involve short term pain. Our crisis is political, not economic."

TOP 10
Norway
Denmark
New Zealand
Sweden
Canada
Finland
Switzerland
Netherlands
United States

BOTTOM 10
Zambia
Kenya
Mozambique
Nigeria
Sudan
Yemen
Pakistan
Ethopia
Zimbabwe
Central African Republic