The US dropped out of the top 10 in the 2018 Bloomberg Innovation Index for the first time in the six years the gauge has been compiled. South Korea and Sweden retained their No. 1 and No. 2 rankings respectively.
Singapore jumped ahead of European economies Germany, Switzerland and Finland into third place on the strength of its top ranking in the tertiary efficiency category.
"Singapore has always placed strong focus on educating her populace, especially in STEM disciplines," said Professor Yeo Kiat Seng, associate provost at the Singapore University of Technology and Design, referring to science, technology, engineering and mathematics. It also has a "steadfast commitment to funding R&D and innovation", added Prof Yeo, who holds 38 patents.
The index scores countries using seven criteria, including research and development (R&D) spending and concentration of high-tech public companies.
The US fell to 11th place from ninth mainly because of an eight-spot slump in the post-secondary, or tertiary, education efficiency category, which includes the share of new science and engineering graduates in the labour force.
Value-added manufacturing also declined. Improvement in the productivity score could not make up for the lost ground.
"I see no evidence to suggest that this trend will not continue," said Dr Robert Atkinson, president of the Information Technology & Innovation Foundation in Washington. "Other nations have responded with smart, well-funded innovation policies like better R&D tax incentives, more government funding for research, more funding for technology commercialisation initiatives."
1. South Korea (1)
2. Sweden (2)
3. Singapore (6)
4. Germany (3)
5. Switzerland (4)
6. Japan (7)
7. Finland (5)
8. Denmark (8)
9. France (11)
10. Israel (10)
• Note: Last year's rank is in brackets.
South Korea remained the global innovation gold medallist for the fifth consecutive year. Samsung Electronics, the nation's most valuable company by market capitalisation, has received more US patents in the 2000s than any firm except International Business Machines.
And its semiconductors, smartphones and digital media equipment spawned an ecosystem of Korean suppliers and partners similar to what Japan developed around Sony and Toyota Motor.
China moved up two spots to 19th, buoyed by its high proportion of new science and engineering graduates in the labour force and rising number of patents by innovators such as Huawei Technologies.
"One common trait of the US, Korea and China is that people accept failure as part of the process," said Mr Prinn Panitchpakdi, country head of CLSA Thailand, an Asian brokerage and investment group.
"Innovation lags in countries where the culture emphasises risk avoidance and where R&D is seen purely as an expense, not an investment. That's the mindset in Thailand." It dropped one spot from a year earlier, to 45th.
Japan, one of three Asian nations in the top 10, rose one slot to No. 6. Denmark stayed at No. 8; France moved up to ninth from 11th, joining five other European economies in the top tier. Israel rounded out this group and was the only country to beat South Korea in the R&D category.
South Africa and Iran moved back into the top 50; the last time both were included was 2014.
Turkey was one of the biggest gainers, jumping four spots to 33rd because of improvements in tertiary efficiency, productivity and two other categories. The biggest losers were New Zealand and Ukraine, which each dropped four places. The productivity measure influenced New Zealand's shift, while Ukraine was hurt by a lower tertiary efficiency ranking.
Movements in this year's list were generally less dramatic than last year's, when Russia took a 14-spot tumble following sanctions related to Ukraine and the plunge in energy prices. In the current index, it moved up one spot to 25th.
The 2018 ranking process began with more than 200 economies.
Each was scored on a 0-100 scale based on seven equally weighted categories. Nations that did not report data for at least six categories were eliminated, trimming the list to 80. Bloomberg released the top 50 and category scores within this cohort.