The index ranks governments in a variety of categories such as absence of corruption, clear and stable laws, open government and access to the justice system.
The aim of the project is to advance the rule of law around the world in a manner that transcends income and cultural factors.
According to the study, Sweden ranked first in five of nine categories —government accountability, absence of corruption, clear and stable laws, open government, and regulatory enforcement— and places in the top 5 in all nine categories.
In providing access to civil justice to its citizens, Sweden came in at number two, after Singapore.
"Establishing the rule of law is fundamental to achieving communities of opportunity and equity -- communities that offer sustainable economic development, accountable government, and respect for fundamental rights," the report said.
"Without the rule of law, medicines do not reach health facilities due to corruption; women in rural areas remain unaware of their rights; people are killed in criminal violence; and firms' costs increase because of expropriation risk. The rule of law is the cornerstone to improving public health, safeguarding participation, ensuring security, and fighting poverty."
While the report, based on a three-year study examining , examines data for 37 indicators on the rule of law, provides no single rank for the 35 countries examined, Sweden, by placing at the tope in five categories, performed the best of all countries included in the study.
The Netherlands also scored high, ranking second in five categories and third in two others.
Austria was the top country for "fundamental rights," and an effective criminal justice system while Singapore topped the list for "order and security" and access to civil justice.
The United States did not top any categories but was third in open government. Most of the rankings were near the bottom of the 11 high-income nations.
Despite Sweden’s outstanding performance in guaranteeing access to civil justice to its citizens —which places it at number two—Sweden still faces challenges in guaranteeing access to legal counsel to its citizens, where it underperforms both its regional and income group peers.
The study finds that people in Sweden have less access to legal counsel in civil disputes than do individuals in some middle-income countries such as Argentina or Colombia.
Another area where Sweden underperforms Western European countries and other high income peers is the effectiveness of the criminal investigation system.
According to a Rule of Law Index poll of 1,000 people in Stockholm, Gothenburg, and Malmö in 2009, only 4 percent of the perpetrators who committed a burglary were punished, a much lower figure than the 10 percent average than in Austria, France, Netherlands, and Spain – the other western European countries included in the index.
According to the report, which was based on 35,000 questionnaires and numerous interviews, "the findings need to be interpreted in light of certain inherent limitations."
"While the index is helpful to tracking the 'temperature' of the rule of law situation in the countries under study, it is not powerful enough to provide a full diagnosis or to dictate concrete priorities for action. No single index can convey a full picture of a country's situation."
The project, which is advised by former US secretary of state Madeleine Albright and former Irish president Mary Robinson, among others, intends to expand its study for 2011 and 2012.