South Korea ranks 27th in the world in terms of economic freedom while North Korea ranks at the bottom of the 178-nation list, a U.S. survey showed Monday.

South Korea's ranking, which is up two notches from a year earlier, represented seventh place among Asian nations, according to the 2016 Index of Economic Freedom conducted by the Heritage Foundation in partnership with the Wall Street Journal. 

Japan ranked 22nd in the world and sixth in Asia, while the North remain 178th, it showed. 

Hong Kong topped the list, followed by Singapore, New Zealand, Switzerland and Australia.

"Over the past five years, South Korea's economy has charted steady, uninterrupted progress in economic freedom. Recent reforms have put greater emphasis on enhancing regulatory efficiency and ensuring a larger role for small and medium-size enterprises in the economy," the Heritage Foundation said. 

"South Korea's dynamic private sector, bolstered by a well-educated, hard-working labor force, continues to capitalize on the country's openness to global trade and investment," it said.

But the report also said that bribery and influence peddling persist in politics, business, and everyday life despite government anti-corruption efforts and that large family-run conglomerates enjoy outsized influence and continue to dominate the economy. 

"Nevertheless, the rule of law is effective, the judicial system is independent and efficient, and private property rights are protected," it said. (Yonhap)