This paper is designed to examine Smith’s view of colonial relationship andpolicy in respect of economic progress. Smith applies to colonial problems inthe 18th century his theories of economic development, which have threedimensions of society, polity and economy. In Smith’s view of development,political, legal and cultural factors as well as economic forces such as thedivision of labor and technical advance affect economic progress and interactover time. In this vein Smith stresses that the moral and social principles ofjustice, liberty, security and equality are critically fundamental inunderstanding the secular performance of an economy, and that social andeconomic welfare of a nation increases in case a set of laws based on thoseprinciples is properly set up and enforced. This story may provide significantimplications for a historical study of Japanese colonial rule over Korea.