Iceland is now the coolest place to live. Per capita GDP is 45 times higher than in Sierra Leone

ICELAND has overtaken Norway as the world's most desirable country in which to live, according to the latest UN index on human development.

Rich, free-market countries dominate the top places, with Iceland, Norway, Australia, Canada and Ireland the first five, while AIDS-afflicted sub-Saharan African states are once again at the bottom.

The United States slips to 12th place from eighth last year in the UN Human Development Index, with the UK taking 16th place behind Austria at 15th.

But the index, which blends 2005 figures for life expectancy, education levels and real per-capita income, finds all 22 countries falling into its "low human-development" category are in sub-Saharan Africa, with Sierra Leone last.

In ten of these countries, two children in five will not reach the age of 40, said the compilers at the UN Development Programme. Last year's report said HIV/AIDS had a "catastrophic effect" on life expectancy in the region.

The index ranks 175 UN member countries, plus Hong Kong and the Palestinian territories. Seventeen countries, including Iraq, Afghanistan and Somalia, are omitted because of inadequate data.

Norway had held top spot for six years, but was edged into second place by Iceland this year because of new life- expectancy estimates and updated figures for gross domestic product.

Iceland, with a population of only 300,000, has developed rapidly. While it still depends on fishing for about 70 per cent of its economy, it has harnessed its vast reserves of geo-thermal energy, invested heavily in technology and has a remarkably even distribution of income.

Per capita GDP is 45 times higher in Iceland than in Sierra Leone.

Luxembourg has the highest per-capita GDP at £29,126, and

Japan has the longest life expectancy at 82.3 years.

The Scotsman - International - Move over Norway, Iceland is now the coolest place to live