New Zealand is the third best country to live in the world, climbing 17 places in the latest United Nations' index aimed at measuring development.

The Human Development Report 2010 (HDR) was released today by UN Secretary-General Ban Ki-moon and UN Development Programme Administrator, and former New Zealand prime minister, Helen Clark.

The report, The Real Wealth of Nations: Pathways to Human Development, highlights countries with the greatest progress as measured by the Human Development Index (HDI).

The index calculates the well-being in 169 countries, taking into account health, education and income, which are combined to generate an score between zero and one. The countries are grouped into four categories: very high, high, medium, and low.

New Zealand was named 20th in the 2009 and this year is just behind Norway and Australia, first and second respectively.

The country's score has been rising by 0.5 per cent a year between 1980 and 2010 from 0.786 to 0.907 today, placing it in "very high" category.

New Zealand's life expectancy is 80.6 years, average number of school years is 12.5, and gross national income per capita is $25,438 ($32,046).

But the report's lead author Jeni Klugram warned not to compare the latest index to previous years because different indicators and calculations have been used.

The 2010 index charts national ranking changes over five-year intervals, rather than on a year-to-year basis.

"Annual changes in national HDI rankings don't tell us much about the reality of development, which is inherently a long-term process," she said.

Other high achievers are the United States (4th), Ireland (5th), Liechtenstein (6th), Netherlands (7th), Canada (8th), Sweden (9th) and Germany (10th).

Mozambique (165th), Burundi (166th), Niger (167th), the Democratic Republic of the Congo (168th) and Zimbabwe (169th) were at the bottom of the index.

The report, the 20th anniversary edition, also looks at HDI data available for the past 40 years in 135 countries and names the "Top 10 Movers".

Most developing countries made dramatic, "often underestimated" progress in health, education and basic living standards in recent decades, with many of the poorest countries posting the greatest gains, the report said.

Oman led the list, which invested energy earning over the decades in education and public health, and was followed by China and Nepal.

China was second mostly because of higher income per capita, but was not a top performer in school enrolment and life expectancy.

"One important finding from several decades of human development experience is that for lasting improvements on the quality of life of citizens, economic growth alone does not automatically bring improvements in health and education," Dr Klugman said.

Nepal did see an improvement in healthy and education. A child born today can expect to live 25 years longer than a child born in 1970, and more than four of every five children attend primary school, compared to just one 40 years ago.

Overall, the report shows over the past four decades, life expectancy climbed from 59 years to 70, school enrolment rose from 55 per cent of all primary and secondary school-age children to 70 per cent, and per capita GDP doubled to more than US$10,000 ($12,587).

Ms Clark said the report shows that people today are healthy, wealthier and better educated than before.

"While not all trends are positive, there is much that countries can do to improve people's lives, even in adverse conditions. This requires courageous local leadership as well as the continuing commitment of the international community," she said.

Top 15 countries

1. Norway
2. Australia
3. New Zealand
4. United States
5. Ireland
6. Liechtenstein
7. Netherlands
8. Canada
9. Sweden
10. Germany
11. Japan
12. South Korea
13. Switzerland
14. France
15. Israel

Top 10 Movers

1. Oman
2. China
3. Nepal
4. Indonesia
5. Saudi Arabia
6. Lao PDR
7. Tunisia
8. South Korea
9. Algeria
10. Morocco