Canada has slipped slightly in the UN rankings of human progress as slower advances in areas such as education deprived this country of bragging rights as one of the top 10.

The United Nations' annual human development index for 2012 puts Canada in 11th place – now passed by Japan, and just ahead of South Korea and Hong Kong.

Norway ranked the highest in the index – which measures development by combining income and other basic indicators of progress such as life expectancy and years of schooling – with Australia and the United States just behind.

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Canada boasted that it topped the rankings in the 1990s. It was sixth when the 2011 index was released last year – although the ratings are not comparable. Data for 2011 have been updated, and the methodology was shifted, and the UN calculates that using the current method, Canada should have been 10th in the 2011 report.

"I wouldn't get too excited about whether it's one, or 11, or 15," Helen Clark, administrator of the United Nations development program, said in an interview. "The truth is, Canada's people enjoy an access to health and education, and a level of income, which is the envy of the world."

Like most countries near the top of the list, Canada continues to improve its human-development ratings, but at a slower rate than lower-development countries, such as emerging markets, where incomes and education indicators have jumped.

However, in recent years, Canada's advances have been slower than most of the 47 countries in the "very high" human development category.

One reason is education. Canadians' average number of years of schooling has stayed flat at 12.3 since 2005. And on another measure used in the index, the expected years of schooling – how many years of education the average child entering school can expect to receive – Canada lags behind comparable countries, such as Australia and the United States.

Another area where Canada slips is inequality. A version of the index adjusted for inequality sees Canada drop to 15th, behind such countries as Iceland, Denmark and Slovenia, mainly because of the high level of disparity in incomes. The United States, third on the overall index, drops to 16th when its score is adjusted for inequality. Life expectancy, education, and particularly, incomes, are much lower for U.S. hispanics and African Americans.

Ms. Clark, a former prime minister of New Zealand, said inequality is a concern, and has come in part with the unequal benefits of globalization in the West – and she noted the titans of commerce she meets each year at the World Economic Forum in Davos, Switzerland, are concerned about it, too.

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"The business leaders are worried about it. You could say they're worried about it because it's a threat to the existing economic model, but I think it's more than that. I think it goes back to that insight from Henry Ford, who said if the working man has money in his pocket … they'll buy more cars. For the economy to move round, you need people to have spending power."

Over all, the index shows many of the countries with the lowest scores rising the fastest over the past decade, including Afghanistan – because incomes have doubled and average education levels, though still low, are increasing quickly.

The UN's human development report for 2012, titled The Rise of the South, paints a picture already well-known in economic terms: that emerging countries, such as Brazil, India and China, are rapidly advancing – the HDI shows that is true not only in economic terms, but in human indicators like education and health as well. And it extends beyond emerging giants to many nations that were once poor – in fact, no country has registered declines in their scores on the index over the past decade.

It also finds that globalization, on the whole, is a driver for development. Countries that registered strong advances on the index also increased their links to the global economy, with a much greater share of their economy coming from international trade. Many of the "low human development" countries with slow advances are landlocked countries far from global markets.

"The policies which seek to protect and close in actually limit opportunity for your people," Ms. Clark said. "You have to step out into the brave world and open yourself to trade and investment. That's the reality of our age and times.

"If you look at China, for example, it's an export-oriented economy. It needs an open world trading system for it to prosper, and there has to be a lesson in that."

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But the UNDP report also finds that active social polices – what it calls a "developmental state" – are a key driver of advances.

Spending on education and health yields advances in human-development indicators. And advances in health and education affect the economy. For example, past advances in these areas are linked to increases in foreign direct investment – in other words, better health and education attract money into a nation's economy.

South Korea, which has developed rapidly since the 1960s, continues to rise rapidly up the index, even now that it's near the top of the list, fuelled by improvements in its education system and investments in infrastructure. The better-educated population will not only have higher incomes, but will be healthier in their old age, the report suggests.

"If you look at the Korean model, what did it prioritize? Education, education, education. It prioritized infrastructure – put in place very modern infrastructure," Ms. Clark said.