LONDON—Canada has cracked the top 10 in a global security assessment that ranks countries based on how peaceful they are.

The Global Peace Index ranked Canada eighth out of 153 countries, a six spot jump over last year.

The index, produced by the Institute for Economics and Peace (IEP), suggests North America overall has improved slightly thanks in part to Canada's rise in the rankings.

The United States was placed at 82, compared to its ranking of 85 last year.

The index says if the U.S. reduced its violent crime rates to that of Canada's, the U.S. economy and its state governments could save billions of dollars on correctional services, health care and lost tax revenue.

Iceland regained the top spot after slipping in last year’s index following violent demonstrations related to the collapse of its financial system, while Libya tumbled 83 spots to 143 in the largest drop in the index's history.

Overall, the index found that the world is less peaceful for the third straight year, with the threat of terrorist attacks and the likelihood of violent demonstrations the two leading factors in making the world less peaceful in 2011.

The index also said violence cost the global economy a staggering $8.12 trillion in 2010.

"The fall in this year’s index is strongly tied to conflict between citizens and their governments; nations need to look at new ways of creating stability other than through military force," said Steve Killelea, founder and Executive Chairman of the IEP.

"Despite a decade-long war on terrorism, the potential for terrorist acts has increased this year offsetting small gains made in prior years," he said in a statement accompanying Wednesday's index release.

Somalia has displaced Iraq as the world's least peaceful nation.

Sub-Saharan Africa remains the region least at peace, containing 40 per cent of the world’s least peaceful countries.

For the fifth consecutive year, Western Europe is the most peaceful region with the majority of countries ranking in the top 20 and four Nordic countries ranked in the top 10.

The index is a measure of global peacefulness, gauging ongoing domestic and international conflict, safety and security in society, and militarization in 153 countries by taking into account 23 separate indicators.

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"There is increasing recognition that there is a real ‘peace dividend’ to be had. Our research identifies eight social attitudes and structures required to create peaceful, resilient and socially sustainable societies," Killelea said.

The eight structures include a well-functioning government, sound business environment, acceptance of the rights of others, equitable distribution of resources, good relations with neighbours, the free flow of information, high levels of education and low levels of corruption.