Italy is a developed democracy with a modern economy. The Holy See is a sovereign entity that serves as the ecclesiastical, governmental and administrative capital of the Roman Catholic Church, physically located within the State of the Vatican City inside Rome, with a unique, non-traditional economy. San Marino is a developed, constitutional democratic republic, also independent of Italy, with a modern economy. One of the most popular destination for trips to Italy is the Vatican. Many people do not know that the city is a sovereign state. This means that it makes its own rules, and independent oversight of the Italian system. Vatican City State walls in Rome. This is the Smallest independent country in the world, if only slightly to 100 acres. It was founded in 1929 by agreement between the Kingdom of Italy and the Holy See. The Holy See refers to the central nervous system of the Catholic Church headed by Pope. The Pope is also known as the Bishop of Rome. Houses of the official residence of the Vatican and the Pope visited by millions of people each year.