The Global Innovation Index 2016, released on Monday, is now in its ninth year and is published by Cornell University and UN agency the World Intellectual Property Organization (WIPO).
It ranks 128 countries according to their innovation capabilities and results and aims to be a “benchmarking tool for business executives, policy makers and others seeking insight into the state of innovation around the world”.
Switzerland topped the table once again, leading a top five that included Sweden, the UK, the US and Finland.
Switzerland files a high number of patents, has quality universities which collaborate with industry on research projects, and is home to many global research and development companies, said the report's country profile.
It also said ecological sustainability was a strength of the alpine country.
However the report identified several weaknesses. Switzerland ranked only 57th for ease of starting a business, 53rd for ease of getting credit and 86th for ease of protecting minority investors.
Switzerland is regularly rated highly when it comes to technology and innovation, thanks in part to the presence of its two federal institutions of technology, EPFL in Lausanne and ETH Zurich, which are ranked among the best in the world and are incubators for start-ups.
In June this year EPFL was named the fourth most innovative university in Europe in a new ranking by Reuters.
The country is also investing in infrastructure and attracts many international companies.
In January Switzerland rolled out its answer to Silicon Valley, a network of five technology parks designed to boost industry, science and tech across the country.
The parks aim to provide young companies with a helping hand, as well as attracting established companies to Switzerland.
And in March the European Patents Office (EPO) said Switzerland made more patent applications per capita than any other nation in 2015.
Speaking to The Local at the time, Silke Meyns, a patents specialist at ETH Zurich, said Switzerland's position in the rankings came as no surprise.
“Switzerland has a very good industrial infrastructure, a lot of companies focusing on research, and we get very strong support from international corporations,” she said.
The Global Innovation Index is historically dominated by highly economically developed countries, and 15 of the top 25 are European.
“Europe benefits from comparatively strong institutions and well-developed infrastructure, while room for improvement is found in business sophistication and knowledge and technology outputs,” said the report.
However China's entry into the top 25 this year marks the first time a middle-income country has joined the leading group.
Despite China's rise, an “innovation divide” persists between developed and developing countries, said the report.
“Investing in innovation is critical to raising long-term economic growth,” said WIPO Director General Francis Gurry.
“In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders.”