The easiest countries in which to start and operate a business aren’t necessarily the largest economies.

The world’s second-largest economy is China, for example, but it ranks 90th in terms of the ease of doing business, according to the Doing Business report from World Bank Group, an international financial institution that offers loans and an array of resources to developing countries for capital programs. The rankings examined 189 countries worldwide, based on 10 key indicators:

  • Starting a business
  • Dealing with construction permits
  • Getting electricity
  • Registering property
  • Procuring credit
  • Protecting minority investors
  • Paying taxes
  • Trading across borders
  • Enforcing contracts
  • Resolving insolvency

If you're starting a business and wondering about your overseas options, here's a rundown of the top five countries where it's easiest to do business, along with the reasons these nations lead the World Bank’s Doing Business list.

Note: The Distance to Frontier (DTF) Score shows, in percentage points, how far, on average, an economy is at a point in time from the best performance achieved by any economy on each Doing Business indicator since 2005 (or the third year that data were collected). The measure is reflected on a scale of 0 to 100, with 100 representing the highest performance, or “frontier.”

1. Singapore

  • DTF Score 2016: 87.34
  • DTF Score 2015: 87.34
  • Change in DTF: 0

For the second year in a row, Singapore is the economy with the most business-friendly environment. The country ranked first in terms of protecting minority investors, enforcing contracts and dealing with construction permits. Singapore also ranked well for paying taxes (5), getting electricity (6) and starting a business (10).

2. New Zealand

  • DTF Score 2016: 86.79
  • DTF Score 2015: 86.75
  • Change in DTF: +0.04

New Zealand earned the top scores for starting a business, registering property, getting credit and protecting minority investors (the "starting a business" category looks at the number of steps entrepreneurs can expect to go through to start up and formally operate a business, plus the time and cost it takes to complete those steps). The country also ranked well for dealing with construction permits (3). Thanks to a streamlined online process, starting a business can take just a few hours.

3. Denmark

  • DTF Score 2016: 84.40
  • DTF Score 2015: 84.26
  • Change in DTF: +0.14

Denmark is the third-easiest country in which to do business. It ranked highest in trading across borders (1), and achieved high marks in dealing with construction permits (5), registering property (9) and resolving insolvency (9). The report notes that Denmark made starting a business easier by implementing a new online platform which allows entrepreneurs to complete business and tax registration simultaneously.

4. South Korea

  • DTF Score 2016: 83.88
  • DTF Score 2015: 83.91
  • Change in DTF: -0.03

The Republic of Korea ranked first in getting electricity, and also scored well in enforcing contracts (2), resolving insolvency (4) and protecting minority investors (8). While the country made two advancements in 2015 – it made transferring property easier and strengthened minority investor protections – 2016 reforms made paying taxes more complicated and costly for companies.

5. Hong Kong

  • DTF Score 2016: 83.67
  • DTF Score 2015: 82.87
  • Change in DTF: +0.80

Hong Kong ranked first for protecting minority investors, and also ranked well for starting a business (4), paying taxes (4), dealing with construction permits (7) and getting electricity (9). Reforms in 2016 have made it easier to start a business by eliminating the requirement for a company seal; improved access to credit by using a modern collateral registry; made paying taxes easier and less costly for companies; and made it simpler to get electricity by streamlining the process for reviewing connection applications and installing meters.

The Bottom Line

These five countries are the easiest places in the world to do business, according to the World Bank report. Rounding out the top 10 on the list are the United Kingdom (6), United States (7), Sweden (8), Norway (9) and Finland (10). Falling at the other end of the spectrum are Central African Republic (185), Venezuela (186), South Sudan (187), Libya (188) and Eritrea (189).

Entrepreneurs play a vital role in any economy. Individual economies can strengthen investor confidence and growth by implementing measures that make it easier for entrepreneurs to do business. From the entrepreneur's standpoint, starting any business is challenging enough. It can make sense to consider these countries, which make starting and operating a business a little easier. (See also: Evaluating Country Risk for International Investing,)

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