As the founder of British Classical economics, Adam Smith, wrote over
two centuries ago:
The first duty of the sovereign [is] that of protecting the society from the violence and invasion
of other independent societies... The second duty of the sovereign [is] that of protecting, as
far as possible, every member of the society from the injustice or oppression of every other
member of it.A related government activity is to provide security of property.
Governments define and enforce property rights that give people a secure
claim to the fruits of their own labour. These property rights include clear
definition and enforcement of the rights and obligations of institutions,
such as corporations, religious organizations, and non-profit enterprises.
In a modern complex economy, providing these “minimal” government
services is no simple task. Countries whose governments are not good at
doing these things have seldom prospered economically.
The importance of these basic functions of government should not be
underestimated. In recent years, economists and policymakers in rich,
developed countries have come to a greater understanding of the
challenges in developing countries that stem from their ineffective
political structures. Local corruption, powerful warlords, and a lack of
basic political infrastructure combine to make official development aid
less effective than it would be in countries with more stable and
representative political structures. As a result, a growing share of official
assistance to developing countries is taking the form of political rather
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