Canada ranked first as a place for entrepreneurs to raise capital in 2008, according to the Milken Institute’s Capital Access Index.

Last year, Canada ranked fourth, but it climbed to top spot in the latest edition of the index, which was released Tuesday.

“In an age of restricted credit, entrepreneurs in some regions may find it increasingly difficult to secure access to capital for growth and development. However, Canada, with its stable equity market and a sound economic policy framework, was able to withstand some of the evolving credit market issues and moved to first place in the Milken Institute’s 2008 Capital Access Index, an annual ranking of entrepreneurial access to capital around the world,” the organization said.

First developed in 1998, the index ranks countries around the world in terms of their ability to support entrepreneurial activity by providing access to capital. The rankings take into account in a variety of factors: macroeconomic environments, financial and banking institutions, the development of the equity and bond markets and alternative capital sources (such as venture capital, credit cards and private placements).

Hong Kong, which had held the top spot for two years running, slipped to second place, mainly due to lower international reserves and higher currency volatility, it noted. Switzerland ranked third, up from seventh place the previous year; followed by the UK and Singapore.

The United States took sixth place, up from 11th in last year’s rankings, and showed improvement in alternative capital and international funding components, the institute said. “However, a drag in bond markets stemming from the credit and housing market turmoil, kept them parked at sixth for the year.”

The biggest improvement this year was from Spain, which jumped up 16 places (27th, up from 43rd). Spain’s jump reflects improvements in alternative sources of capital, financial and banking institutions and international funding over the prior year, it said.

The report notes that emerging markets and, in particular, Asian economies that have rebuilt since the 1997-1998 crisis, may be in a better position to contain the impact and continue to improve their ability to provide capital to growing industries and businesses. Some of the more well-established markets will need additional time to recover lost ground, it added.

IE