The organisation looked at a wide range of democratic variables before dividing the 167 countries surveyed into four categories: full democracies, flawed democracies, hybrid regimes and authoritarian regimes.
"Sweden, a near-perfect democracy, comes top, followed by a bevy of similarly virtuous northern European countries," the EIU reports.
The other wholly democratic northern Europeans are Iceland, Netherlands, Norway and Denmark.
When 60 indicators were graded from 1 to 10, Sweden achieved a dazzling score of 9.88. The indicators were spread across five broad areas: electoral process, functioning of government, political participation, political culture, and civil liberties.
"More surprising are the relatively modest scores for two traditional bastions of democracy—Britain (23) and the United States.
"In America there has been a perceptible erosion of civil liberties related to the fight against terrorism. Long-standing problems in the functioning of government have also become more prominent.
"In Britain, too, there has been some erosion of civil liberties but also a shocking decline in political participation," according to the report.
Italy (34), however, a country recently depicted by The Economist as ‘the sick man of Europe', is considered a flawed democracy.
North Korea, with a cumulative score of 1.03, is the least democratic country in the world.
Stefan Hedlund, Professor of Soviet and East European Studies at Uppsala University, chuckles when he hears the source of the report.
“I remember that The Economist referred to Sweden as a one-party democracy just a few years ago,” Hedlund told The Local.
“Formally Sweden is of course a democracy but there are some problems. The power of appointment for example is probably the hottest political potato at the moment,” he added.
There have been many examples in recent years of long-serving politicians being rewarded late in their careers with less demanding jobs as ambassadors or county governors.
The alliance parties have proposed removing this feudal relic and replacing it with a more modern approach.
Inga-Britt Ahlenius, head of the UN's Office of Internal Oversight Services, pulled no punches when describing the prevailing appointments system in an interview with Dagens Nyheter last year.
“The process takes place with no visibility whatsoever. It is completely arbitrary, in sharp contrast to the image we have of our openness.
“It does not work like this in any other state governed by law. In other countries it is taken for granted that all posts will be publicly advertised and people will be chosen on their merits,” said Ahlenius.
In the same interview Ahlenius states that Swedes have traditionally had problems holding people in power responsible for their actions.
“There are recurrent cases of pure corruption, even if we choose to use more innocent terms,” said Ahlenius.
Stefan Hedlund would prefer it if Sweden had a public appointments system that was “more like Norway, where it is much more open and transparent.”
The Uppsala professor also contends that “very few people are upset” by “a level of hegemony that is quite unique” built up under successive Social Democratic governments.
“I think we need a constitutional court in this country but Social Democrats will always argue that politics is above the law,” said Hedlund.
He argues that people have become so used to the Social Democrats that the only way that Fredrik Reinfeldt could win the election was to pose as one himself.
“It is a different ballgame now. But how long will it take to change the underlying culture? It is interesting for social scientists to speculate, but these things tend to move glacially,” said Hedlund.
Sweden and the USA are diametrically opposed on one important point, argues Hedlund. Where Swedes treasure equality, liberty is everything for Americans. To achieve equality, Swedes place a lot of money in the hands of the state.
“There is a general notion that resources belong to the state, a sense that money for schools, for example, belongs to the education minister. But really it is our money,” said Hedlund.
While Hedlund would like to see a move away from a hegemonic mindset, his worry is that Reinfeldt could “trigger a backlash” if he moves too far away from the accepted paradigm.