The Netherlands and the Nordic countries took the top six places in the study, which considers 60 factors divided over five general categories; free and fair election process, civil liberties, functioning of government, political participation and political culture.
The study examined the state of democracy in 167 countries, with governments grouped in four categories, ranging from full democracies to authoritarian regimes.
Norway scored top marks of 10 in three categories, 9.64 in functioning government, and lost a higher ranking by only scoring 8.13 in political culture (factors like a lack of apathy and peaceful transfer of power).
The reports singled out the USA (17th) and Britain's (23rd) poor results, partly to blame on measures adopted to fight terrorism.
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