Qatar has retained its position as the Middle East's most innovative economy in the annual Global Innovation Index 2012 (GII).
The index ranked the future host of FIFA World Cup 2022 33rd globally, one place ahead of powerhouse China, the world’s largest emerging economy.
The gas-rich state fell seven places compared to last year but was still ahead of the UAE which was placed 37th, down three positions over 2011.
The study, commissioned by leading business school INSEAD in partnership with other firms, scored 141 countries based on the degree to which their economic environment enables innovation, as well as actual innovative outputs.
In the Gulf, Bahrain rose five places to 41st while Oman was the fastest climbing economy in the Middle East, rising 10 places to 47th.
Saudi Arabia was ranked 48th (up six places on 2011) while Kuwait was the lowest ranked GCC nation at 55th, down from 52nd last year.
Globally, the list of top 10 performers was changed little from last year with Switzerland, Sweden and Singapore ranked in the top three.
The top ten was completed by Finland, United Kingdom, Netherlands, Denmark, Hong Kong, Ireland, and the US.
Where most MENA countries trailed innovation leaders was in innovation outputs, the index showed.
Qatar, Jordan and the UAE lead the regional ranking, but they all scored below the top 40.
"The GII is a timely reminder that policies to promote innovation are critical to the debate on spurring sustainable economic growth," said Francis Gurry, director general of report partner, the World Intellectual Property Organisation.
"The downward pressure on investment in innovation exerted by the current crisis must be resisted. Otherwise we risk durable damage to countries' productive capacities. This is the time for forward-looking policies to lay the foundations for future prosperity."
"Innovation is becoming the spearhead of competition - at a regional level, on a national level, and for companies," added Ben Verwaayen, CEO of Alcatel-Lucent, another partner of the index.
"How to deal with that challenge will determine the destiny of competiveness for all players."
China (34th) was the top-ranked emerging economy while Russia was ranked 51st, Brazil 58th and India 64th.
The report identified a need for the BRIC countries (Brazil, the Russian Federation, India, and China) to invest further in their innovation capabilities to live up to their expected potential.