No longer the purview of foreign policy wonks, soft power is now firmly embedded in the dispatches, speeches, and discourse of senior diplomats, world leaders, and news editors across the globe – and with good reason. The rapidly evolving nature of world politics is throwing up a host of new challenges for the practitioners of statecraft. A shifting balance of global power and the effects of instant information have made soft power a critical component of foreign policy strategies. As more foreign ministries wake up to this new reality, soft power is no longer the preserve of western states.

While countries such as China, Turkey, and Brazil began thinking seriously about the softer side of their diplomacy midway through the past decade, unlikely new acolytes are coming to the fore. Indeed, when a realpolitik-minded state such as Russia starts making public overtures to soft power – as Prime Minister Medvedev did in September – one can be confident that the game has really changed.

Originally coined by Harvard’s Joseph Nye in 1990, “soft power” is defined as the ability of one state to change the behaviour of others through the means of attraction and persuasion, rather than coercion or payment. Turning a relatively amorphous academic theory into concrete policy has taken the best part of two decades. The increasing prevalence of soft power, from Washington to Warsaw, has in turn led to thoughts about how best to judge its success. Who has it and who uses it well?

monocle’s Soft Power Survey, now in its third year, is the first attempt to judge soft power strategies globally. Since its inception it has sparked debate in foreign ministries and prompted more then a few governments to reassess their use of soft power. We’ve once again collected a broad set of statistics and subjective data (50 metrics in total), comparing countries’ standard of government, diplomatic infrastructure, cultural output, capacity for education and appeal to business. There are also a handful of more subjective measurements, from the quality of their national airlines and cuisine to the standard of architecture and business brands, all judged by a team of Monocle editors.

The results of the index provide a snapshot of states’ soft power resources. As such, the rankings are not an absolute measure of influence, but rather states’ potential for influence. In fact, some of the best-placed countries routinely undercut their own soft power through poorly conceived policies, short-sighted spending decisions or clumsy messaging.

The results of this year’s index throw up some interesting changes from our 2011 rankings. Brazil has made substantial gains as it prepares to play host to the world twice in the next four years. Turkey too continues its ascent up the table off the back of cross-cultural appeal and smart positioning. South Korea has also had a strong year, hosting a number of global summits, outperforming at the Olympics, and – of course – giving the gift of Gangnam. The top of the table received a slight shake-up as well.

Ultimately, the aim of the index is to push the debate on soft power forward; not for the sake of arguing who is better than whom, but to encourage critical thinking about soft power. Because as more countries rush towards the development of soft power strategies, their efforts will be fruitless without a precise understanding of where they derive their soft power, and where it will be effective. Let the debate commence.

“Britain is Great”, the posters proclaimed. It was a curious advertising campaign, capturing both Britain’s arrogance and insecurity in just three words. And yet there truly was something to sell. The traditional view of the United Kingdom – bowler hats and umbrellas, royals and high tea – has become tired and clichéd. From sport to design, music to film the UK of the 21st century is rather different than its previous incarnations. It could still do with a touch of branding, of course, starting with its name: UK? Britain? Great Britain? No-one really knows the difference and it wouldn’t hurt to choose one and stick with it. So long as you don’t say England. That, understandably, annoys the Welsh, Scottish and Northern Irish.

The Britain that the country has become was best summed up in the opening ceremony of the Olympic Games. Directed by Danny Boyle the three-hour show told the story of Britain from the Industrial Revolution to the present day, taking in the creation of the National Health Service, the birth of the World Wide Web (founder: Tim Berners-Lee) and even Harry Potter. It managed to not only unite a nation that has often had trouble summing itself up, it was also a brilliant advert to the rest of the world – shown for free in pretty much every country (which even included the briefest glimpse of a lesbian kiss, something that may have come as a surprise to some viewers in Saudi Arabia).

The four weeks of Olympic and Paralympic action that followed lived up to the introduction. The home team outperformed all expectations but far more importantly it also proved itself to be an impressive host.

The Olympics were not the only sporting triumph for Britain this year. Bradley Wiggins, one-part sideburns, two-parts cycling superstar, became the first Brit to win the Tour de France, while in tennis Andy Murray nabbed his first grand slam at Flushing Meadows in New York. The image of England’s premier league footballers took something of a battering as race rows overshadowed performances on the pitch but the league remains one of the country’s best exports, filling bars across Asia and Africa every weekend.

Two other Olympics stars continue to show the world the best of British, though neither of them are known for their sporting prowess. The appearance of James Bond and the Queen in the opening ceremony – and the less-than-ceremonial way in which Her Majesty threw herself out of a helicopter – cemented their position as two of the world’s most enduring soft power icons. As the year ended Daniel Craig’s face was visible on every billboard from San Francisco to Shanghai as the latest Bond film enjoyed the global franchise’s biggest ever release.

Yet just because Britain has soft power does not mean it necessarily knows how to use it. Cuts to both the Foreign Office and the BBC World Service will continue to chip away at the UK’s overseas clout. The UK’s stuttering economy will do it no favours either. Granted, no one in Europe is in fine shape at the moment but the poisoned legacy of austerity could be felt for years to come. The governing coalition’s foreign policy continues to veer between welcome support for nascent democratic movements in much of the Middle East and North Africa and an unappealing “Little Englander” attitude towards its partners in the European Union. It should be noted that promotion of democracy does not appear to be a universal British principle – Saudi Arabia and Bahrain remain strong allies despite their autocratic rulers.

The government’s lack of investment in the country’s creaking infrastructure could cause problems in the long-term, while its anti-business views on immigration and irrational promise to cut the number of foreign students are already preventing Britain’s businesses and universities from attracting the best of the world’s talent.

Still, the UK, Britain, call it what you will, has much to celebrate. Staying at the top will be a challenge but they should enjoy it while it lasts.

Despite making the headlines of newspapers around the world, this year’s US presidential election may not have done much for America’s soft power credentials. With potential leaders of the globe’s largest economy bickering over issues such as contraception, funding for public broadcasting and even the nationality of President Obama, this year’s various campaigns have left a considerable dent on the image of America as the Great Society. Add to that Mitt Romney’s catastrophic European tour this summer or the entire political existence of Donald Trump and the 2012 election fast becomes one of the country’s worst brand ambassadors. However, still masters of exerting soft (and hard) power, the US hasn’t fallen far down in our Soft Power Survey. While the UK can stake claim to the biggest Olympics win by hosting the monumental event, the US still came away with the highest number of medals. From the perfectly tweeny women’s gymnastics troupe to the bombastic men’s basketball squad, Team USA dominated the scoreboards and flew the flag in their strongly branded Nike uniforms. And although Canadian Carly Rae Jepsen’s “Call Me Maybe” might have been the catchiest (or most annoying) song of the year, shows such as Showtime’s Homeland and best-selling pop stars such as Taylor Swift continue to demonstrate the global reach of America’s entertainment industry.

Still the world’s largest donor of foreign aid, the US has not had a simple time negotiating its role abroad over the last year. Reports of secret drone strikes and poorly behaved troops do little to boost trust in the presence of US military overseas. And while the September attack on the consulate in Benghazi looks to have been one of isolated terror, there’s little doubt that populations across the Middle East look to America with resentment.

Nevertheless, the US government spent over $968m (€747.9m) on global food initiatives, $8bn (€6.1bn) on world health and $481m (€371.6m) on preventing climate change in 2012 alone. Although relief packages stamped with usa won’t do much to assuage deep-rooted tensions, they’re certainly a step in the right direction. And with ambassadors such as Susan Rice in the United Nations and 169 embassies operating abroad, American diplomacy and aid remain essential around the world.

America needs to tone down its heavy military influence abroad and rely more on its soft power. Uniquely involved in the cultural and consumer lives of millions of people around the globe, the US should rely more on its diplomacy than its drone strikes to assert its authority overseas.

The unofficial yet undisputed leader of Europe reaches its highest position in our Soft Power Survey, thanks in no small part to the strength of its business brands and the importance of German leadership during the Eurozone crisis. Leadership is perhaps too strong a word, though. While Angela Merkel is clearly in charge she has been hesitant to do what is necessary to drag the continent out of its economic malaise, partly because of fears that she would fail to take the country with her.

Still, every other major decision-maker from François Hollande to the head of the European Central Bank, Mario Draghi, knows they have to visit Berlin if they want to influence European economic policy.

The longer the crisis drags on, the less goodwill the rest of the continent will have towards Germany. There have been other blips this year too, most notably the failure to open the new airport in Berlin on time. Still, Germany has enough in its soft power arsenal, from the Goethe Institut to the popularity of its football league – the Bundesliga – to keep it near the top for many years to come.

France, our joint winner two years ago, has slipped once more. Economic uncertainty and a stumbling president don’t help but France’s soft-power problems are a little broader. Its cultural institution, the Alliance Française, is getting a touch tired – for inspiration it should take a look at how its next-door neighbour uses the Goethe Institut.

From football to rugby, its sports teams are also losing a little lustre. After a strong start at the Olympics France performed poorly (and was constantly reminded that London had beaten Paris to host the Games).

France still has some of the best museums and art galleries in the world, while its cuisine is second to none. And in 39-year-old novelist Aurélie Filippetti, France has a new culture minister who understands the importance of promoting the arts.

The Swedes do soft power effortlessly. Beyond the obvious assets of abba, ikea and Stieg Larsson, Sweden has a knack for selling itself as one of the friendliest, most functional countries.

A new wave of younger designers, singers and entrepreneurs is helping keep its image up-to-date. Anyone who flies into Stockholm’s Arlanda airport will see what Sweden has given to the world; on arrival you’re greeted by portraits of national heroes. And there are lots.

However, perhaps what’s most impressive is that the Swedes haven’t allowed their cultural stereotype, of being the best-looking (and best-looked after) people on the planet, slip into caricature. Everyone, besides Julian Assange, loves Sweden.

Japan’s recovery following the earthquake and tsunami last year has gone beyond just rebuilding what was damaged or destroyed. Perhaps in response to the outpouring of humanitarian and financial aid from the rest of the world, the Japanese are shedding their insular ways and seeing the economic, cultural and social benefits of opening up.

Japan’s fashion, retail, food and pop music are formidable assets. The country’s legendary craftsmen and designers are in hotter demand than ever before and are collaborating with foreigners away from home turf. Japan has a richer contemporary architecture scene than any other country too, which was sealed with the award for Best Pavilion at the Venice Architecture Biennale. And don’t forget the power of manga and anime. For many people across the world this is their first connection with Japanese culture – and it’s still a winner.

It’s amazing what one woman in a woolly jumper can do for your national brand. In the last year Denmark has capitalised on the global success of its television series, which keep coming thick and fast. From The Killing to The Bridge and Borgen, the world is finding out there’s more to Denmark than bacon and butter. Not only have the original versions become huge hits, they have also spawned a series of remakes and sent dozens of the world’s top TV producers to Copenhagen in search of the next big idea.

But it’s not just TV dramas that have propelled our friends in the north up the rankings. In fact there’s no corner of culture the Danes aren’t excelling in at the moment. Music, art, architecture and design are all hefty exports that have made the leap beyond the Nordic region of late, while Copenhagen continues to attract millions of tourists every year. It has the most elegant royal yacht on the seas and a charming, modern royal family to boot. Oh, and it’s changing the way the world thinks about food too.

The Swiss are nothing if not steady so no surprises that they haven’t budged on our ranking. But there’s a lot to be said for being reliable and perhaps Switzerland’s soft-power trump card graces the wrists of successful folk the world over.

Watches aside, the Swiss have a scrupulous attention to detail, which works particularly well in industry, infrastructure and architecture. While Swiss music and food (bar chocolate) mightn’t travel so well and neutrality isn’t the most exciting agenda, Switzerland is a country where everything operates like clockwork. And between numerous finishing schools, Ecal and the Ecole Hôtelière de Lausanne, the country does a stellar job churning out generations of poised, professional people.Much like the Swiss themselves.

Australia finds itself at an interesting juncture. Long seen as being a backwater of diplomacy it now finds itself increasingly drawn into events in the resource-rich Pacific region. For now it is balancing well its desire to appear robust while also keeping everyone from China to the US on side. It will need to hone its soft power skills in the future, however, if it wants to maintain its reputation as everyone’s friend. And there are other issues that continue to tarnish the soft-power image of Australia: what it thinks of migrants being key. Because despite all the talk of having one foot in Asia, many Australians are less keen for Asians to have two feet in Australia. The Aussies also had a tough moment in 2012 when they reached for the switch off buttons on their TVs as their sportsmen and women didn’t deliver as expected at the London Olympics. If Australian swimmers took a dive, its other soft power icons, especially in music, continue to hit gold.

If you want to know what the world thinks of Canada, jump in a cab in Toronto. Your driver may be Ethiopian or Tibetan, he’ll take you past the Lithuanian community hall, stop while an Estonian crosses the road, turn at the Polish restaurant and drop you off outside an apartment block owned by a Nepalese family. Canada’s appeal is universal. It’s like America without the school shootings and facelifts. Canada is still seen as being accepting of migrants and in part that’s true because the economy was never badly dented by the events of 2008 and has proved resilient ever since. But Canada cannot rest easy. The country is having to flex its military muscles and shout a little louder to make sure people take note of its ambitions in the High North: see the new $50 note with an icebreaker on the reverse. And that’s likely to lead to some elbowing with Arctic neighbours.

PSY. Who just a year ago would have imagined that Park Jae-sang, aka PSY, would have a global hit with his song “Gangnam Style” and its equine-referenced video (to date over 530 million people have watched the video on YouTube)? Well, monocle did, actually. In Issue 04 our cover story looked at K-pop and its ripeness for global exporting. Now the world knows about it and more bands are sure to jump on Korean Air and head to the US and Europe (check out the videos for Super Junior if you want to see the future of the boy band). K-pop is proving an extraordinary calling card for South Korea, which has been known for little more than good tech until now. The country has a real desire to export its culture. Be prepared to learn more choreographed dance moves.

Norwegian ambassadors must look at their diaries, see October approaching and wonder what new misery awaits them. What was once seen as a golden soft power ticket has become a millstone. Is it time to just stop awarding the Nobel Peace Prize? This year’s award to the EU was tinged with committee desperation; the award to jailed human rights activist Liu Xiaobo in 2010 managed to sour relations with China; and the 2009 award to Barack Obama made even the president look uncomfortable. Luckily, Norway is doing other things to help its soft power credibility. The way it coped in the aftermath of the murders committed by Anders Behring Breivik in Oslo and on Utøya was exemplary, and its determination to invest its vast oil wealth responsibly is genuine.

There’s more to Finland than Father Christmas and Nokia and the Finns are doing a good job at spreading the word. Traditionally rather shy about their own achievements, the past few years have seen a refreshing change of attitude when it comes to self-promotion. And it’s paying off. Finavia’s positioning of Vantaa as the European-Asian air hub continues to grow, herding countless Japanese tourists back and forth to worship at the shrine of Moomin. A savvy entrepreneurial scene combined with a progressive food culture are attracting outside interest too. And this year, with Helsinki as World Design Capital, the nation’s community of architects, designers and urbanists have been busy shouting from the rooftops that Finland is a nation of problem solvers and professionals.

The departure of Silvio Berlusconi has done wonders for Brand Italy, not least because his successor, Mario Monti, is the last person one would expect to know what a “bunga bunga” party is let alone attend one. Mr Monti has done a good job representing the nation. Even if he is a technocrat, he’s a well-dressed one. And that’s the thing. The nation’s designers continue to out-dazzle the antics of its politicians and even the economic woes that blight the country. The world is willfully optimistic when it comes to Italy. The heady days of pink neo-realism, Federico Fellini and La Dolce Vita persist in the international mind’s eye. Despite its fiscal crisis the country that invented the Slow Food movement is slowly shaping its niche in cuisine and manufacturing.

Even Dutch people seem to be a bit fed up with their image. In a recent meeting with a senior Dutch official, he listed what his nation was known for – being nice to gays, dope cafés and some right-wing politicians. It’s hard to imagine that a generation ago the Dutch were seen as the most progressive players in Europe and that their social models were being picked over by envious foreign governments. Today, anyone wanting to see how to run an education system will head to Helsinki and to look at parental benefits they’ll go to Copenhagen. The failure to sell Dutch design and vision hints at an internal debate about what it means to be modern and Dutch. They need to make more of their embassies to sell their contemporary culture and get over their contemplative decade.

The fundamental essence of modern Spain remains intact: outsiders like its perceived sunny disposition, its cinema, its food. But there have been some tremors that have left the world unsure where Spain is headed and dimmed the feeling that it would be quite nice to be Spanish. The cause? The Eurozone crisis. Spain’s economy has been hit hard, unemployment rates are high enough to induce palpitations in any treasury official and austerity measures are causing acute pain. There is also a constitutional crisis on the cards that could lead to the break up of the nation – Catalonia seems to be leading the charge to go it alone with little feeling about what would happen to the rest of Spain. It’s difficult to be a soft power star when all that’s going on.

Brazil’s global soft power prowess is based on the simple fact that we all like Brazilians. They are seen as peace-loving, welcoming, able to mix people from numerous cultures (often within one person). And while all these clichés may have served Brazil rather well, there have been some other changes afoot that have endorsed the importance of Brazil in more surprising ways. High-profile corruption trials have seen people being punished for using power and politics to fill their bank accounts and this has allowed the country to be seen as a good place to invest; the heat in the economy has been better managed than many feared; and the foreign ministry has developed a wise and nuanced set of policies. In short, Brazil’s influence has never been more welcome.

Felix Baumgartner’s heroic jump from space has at last given the landlocked Alpine nation a modern day soft power icon to be proud of. Much of Austria’s offering remains charmingly old-fashioned – the music of Mozart and the history of Vienna bring in the tourists (though as we suggest on page 242, the Austrian capital has a lot to shout about when it comes to Christmas shopping). With a decent number of foreign correspondents and students too, it clearly doesn’t struggle to attract visitors on a long-term basis either. But now Baumgartner’s exploits provide a fresh opportunity, not least because it also highlights the Austrian roots of the company that backed him, Red Bull.

Eden Hazard, Vincent Kompany and Moussa Dembele wish to politely request that you no longer repeat that line about there being no famous Belgians. The trio may not be household names yet but as the key players in Belgium’s “golden generation” of footballers, they have the potential to become stars at the next World Cup in 2014. Belgium could do with a boost: the political situation is so fractured that it’s possible the country won’t even exist in a decade’s time. In the most recent local elections, the Flemish nationalist party, which wants to break away, won more than a third of the vote. Belgium still does the dull stuff well: it scores highly on business, diplomacy and education. Brussels is still a double-edged sword: a lovely city that has also become a byword for bureaucracy.

Continuing its steady rise, Turkey has broken into our Soft Power Survey’s top 20 for the first time. More global businesses searching for new bases like the look of Istanbul, Turkish Airlines is adding more adventurous routes and the country’s famous soap operas are finding new audiences across Europe. Prime minister Recep Tayyip Erdogan’s grand plans for Istanbul may be difficult to pull off but they are certainly ambitious. Its challenge over the coming years is to ensure the forces of conservatism do not undermine Turkey’s impressive democratic progress, economic growth and gradual social liberalisation. An increasingly unstable neighbourhood could also cause problems.

Is it possible to write about New Zealand’s soft power without mentioning the “H” word? No, it’s not. New Zealand milks JRR Tolkien’s sagas for all they’re worth and the release of The Hobbit later in 2013 will see yet another round of hobbit-linked promotion – the country’s mint has even produced special Hobbit coins. Tourism aside, New Zealand plays an important diplomatic role in the South Pacific, something that has the potential to increase as Australia focuses more on Asia.

The last time China picked up a Nobel prize the country’s leaders were less than enthusiastic. Mo Yan’s recent literature gong has gone down better than Liu Xiaobo’s award for peace. The global popularity of Ai Weiwei – and his appalling treatment at the hands of the Chinese government – undermines any benefit Mo’s victory brings. Like its old friends in Moscow, Beijing doesn’t understand that soft power cannot be bought. cctv may be seen all across Africa but it will never have the cache of a bbc.

It will take more than shops selling pastéis de nata around the world to transform the image of Portugal. The country’s economic woes – they really are as bad as they appear – are not going away any time soon. But the country’s architectural heritage and its occasionally misfiring national football team still have the capability to help this nation of 10 million people to punch above its weight. Taking advantage of its Lusophone links – as we have suggested before – would certainly help.

Despite the disastrous fiscal fiasco that saw its economy crash in 2008, the limping Celtic Tiger has crept into our rankings at a solid number 24. The Irish Republic’s smiling ethos exports well. Its pubs are popular and prolific: whether it’s Kennedy’s in Beirut or Flanagan’s in Bermuda. Ireland is helped by an avid, loyal diaspora that regales the world with their nation’s story and its cultural exports are both popular (Bono, Enya, Sinéad O’Connor) and lofty (Heaney, Yeats, Joyce, Stoker and Wilde).

Poland’s national work ethic became a cliché when its diaspora set up shop in Northern Europe. But this oft-cited entrepreneurial spirit is paying off. The nation’s economy is on the move. Its industrial base is growing and it has become the first nation outside the US to manufacture the Black Hawk S-70i helicopter. Poland is going beyond petrochemicals and big machines. Its contemporary writers such as Olga Tokarczuk and British-Polish curator Jasia Reichardt are gaining global audiences.

If Singapore should ever succeed in its soft-power push it needs to let its hair down. The government keeps pouring money into new museums, exhibition venues (Gillman Barracks being the latest successful opening of a government-sponsored arts enclave) and art schools, which is all good and well, but it makes one mistake – it babysits. One of the latest victims of the government censors is an independent film by Ken Kwek, which at the time of this issue going to press had been banned from local cinemas.

Mexico’s wealth of soft power assets struggle to get past the headline-grabbing violence in the country. Despite this, the country has reclaimed its sombrero and set out its stall as a vibrant, quirky nation of innovators. Its cuisine – which was for so long hijacked by TexMex – is now returning to its Pre-Colombian routes with regions such as Oaxaca and Yucatán bringing new dimension to the much loved lashings of guacamole (there’s even an export of crunchy Chapulines grasshoppers).

The perfect example of how a country can’t buy soft power. Despite the millions invested in Russia Today it has managed to gain no reputation for either editorial independence or impressive journalism. Roubles may be more effective for the upcoming Winter Olympics in Sochi: impressive stadiums plus friendly fans could help shatter a few icy images. Oddly, Vladimir Putin, stunts and all, is a compelling soft power icon in much of the world, but hard power remains his main diplomatic weapon.

Israel’s soft power certainly doesn’t come from the central state or government but has been oddly outsourced to one city, Tel Aviv. In recent years this city, with a mayor who is internationally admired, has managed to recreate a warmth for Israel perhaps not seen since the 1960s. Its deliberately inclusive tourist policies (for example, holding a vast annual gay parade) has helped Israel and Israelis step away from their image as the people who built a wall to keep out Palestinians.

A new entry this year, the nation traditionally known as the “land of smiles” knows a thing or two about the power of attraction. Buoyed by a return to democracy and a charismatic prime minister, Thailand is positioning itself as a driving force in Asean. The nation’s music and film industries are making inroads to global markets – from T-pop to the films of Apichatpong Weerasethakul. But maintaining its momentum abroad will require Thailand to address very real challenges at home. Pass the pad Thai.