NEW YORK ( MainStreet) — The U.S. is lagging in wealth and well-being factors while Norway, Switzerland and Canada are in the lead due to improvements in entrepreneurship, health and education, according to the Legatum Prosperity Index.

"The danger of defining your country as developed is that there is almost no room for improvement and that attitude stifles creativity, innovation and entrepreneurship," said Fredrik Haren, entrepreneur and author of the book The Developing World (Interesting Books, 2010)

Bangladesh and Kazakhstan have risen seven places on the overall rankings since 2009, and the U.S. and the U.K. dropped four and two places, respectively.

"Issues of war, governance and personal freedom continue to dog the Middle East and parts of Africa," said Jeffrey Gedmin, president of the Legatum Institute. "Leading nations are not exempt with the US and UK experiencing poor performance in recent years."

China, Thailand and Malaysia are all experiencing a rise in prosperity. In fact, about 35% of Americans think China will be the dominant economic power in five to seven years, according to a survey from TheStreet.

"Despite the slow economic recovery of the five years since the financial crisis, most people in the United States still regard the nation as the world's dominant economic power," said Joe Deaux, TheStreet's economics analyst. "However, confidence that the U.S. will retain that status five to seven years out wavers."

The prosperity index is an assessment of global wealth and wellbeing, benchmarking 142 countries in eight distinct sub-indices. To mark global progress since the launch of the index seven years ago, the Legatum Institute highlighted twenty countries as regional or sub-index leaders that are expected to move up the rankings by 2020.

For example, Trinidad, Tobago and Slovakia are experiencing increases in prosperity, strong economic growth and are taking positive action to overcome national challenges.

"It took America more than 10 years to rebuild the World Trade Center after the September 11 terrorist attack," Haren said. "In a developing country, they would have made a point of getting a new building up fast to show that they were back in the game again."

Germany has recorded the highest increase in overall prosperity in Europe in the 14th position but falling governance and challenges to personal freedom have limited prosperity in Syria, Egypt and even the highest-ranking Sub-Saharan nations, including Botswana, South Africa and Namibia have declined.

"The world has seen many countries experience continuous improvements in wealth and wellbeing but we cannot afford to be complacent," Gedmin told MainStreet.

Ranked 106th, India has declined overall and was overtaken for the first time by Bangladesh at 103rd in the ranking. Pakistan's progress has been hampered by security-related challenges.

"The U.S. should become a developing country again and learn more from Bangladesh," Haren told MainStreet.