This is the full text of a talk delivered by Governor Sir John Vereker to the Adult Education International Relations Seminar at Bermuda College last week.

Let's start by reminding ourselves of our place in the world. At the turn of the century, the global population was about 6 billion. Some of you may remember “6 Billion Day”, 12 October 1999, when that figure was reached. Since then, growth has been a little slower than expected - my population clock, set to the 1999 growth rate, tells me we have reached 6.41 billion, whereas the UN thinks it is now only 6.32 billion. But of these, at least a quarter and perhaps one third, say 2 billion, are living in absolute poverty - defined as an income of less than a dollar a day. These people face a daily struggle for existence, carry their water for miles, go to bed hungry every night, and know their children are likely to do the same.

At the same time as technological change and steady economic growth has been creating wealth in the rich countries faster than ever before in human history, the international effort to eradicate global poverty has been in danger of failing. The central Millennium Development Goal - to halve by 2015 the proportion of people living below a dollar a day - now requires a doubling of the average growth rates in the developing world.

Here in Bermuda we have a population of some 64,000, which to put it in its global context is the amount by which the world population increases about every seven hours, on a land area smaller than Heathrow Airport. But we are by some measures the richest territory in the world: Pricewaterhouse Coopers estimated earlier this year that our GNP per capita had reached the $50,000 mark - half as much again as the US, and a hundred times greater than many of the poor countries in Africa. So why should we worry about what's going on in the rest of the planet?

If John Donne were alive today, he might well be saying “No island is an island” rather than “No man is an island”. He was observing that individuals could no longer thrive in isolation from each other, given the complexity of Elizabethan society. Today, there is no island community, not even Pitcairn, which can thrive on the basis of self-sufficiency, because of the way in which modern communications have shrunk the world. Here in Bermuda, we know this better than most, because from the day of first settlement nearly four hundred years ago we have been trading our location and our resources in return for goods and services from the outside world.

Over the centuries we have traded our cedar for shipbuilding, our tobacco for smoking, our labour for salt collecting, our natural harbours for naval vessels, our pink beaches for tourism and our tax regime for financial services. In return we have been able to consume everything the world has to offer, from rare textiles and exotic spices in the early days, to today's motorcycles, electronic gadgetry and advanced building materials.

But for Bermuda as for other islands something important has changed over the last two decades. That is the revolution, brought about by modern information technology, in the way business is now done. Today's systems allow the almost cost-free movement of capital and information around the globe at the click of a button. This has had a huge effect. Almost every market place is a global one. The increased ease of movement of goods, services, capital, people and information across national borders is rapidly creating a single global economy. It is accompanied by a diffusion of global norms and values, the spread of democracy and a proliferation of global agreements ranging from free trade to the environment, from financial regulation to human rights. All this has come to be called Globalisation.

What does this mean for Bermuda? I think it means four things.

First, it is going to be harder, but more important, to remain competitive.

Look at what has been happening in northern Mexico. Huge manufacturing complexes have been established there over the last ten years, benefiting from free access to the US market under the North American Free Trade Agreement (NAFTA), and from cheap Mexican labour. The minimum wage in Texas is about $6 an hour; semi-skilled labour in Mexico can be hired for less than that for a day. But now these manufacturers are moving to China. Why? Because the same amount will hire Chinese labour for a week. So production of your Sony Television, once made in Japan, moved first to Wales, then to Mexico, and now to China.

Globalisation, you see, increases choice in the marketplace. Every comment placed by every tourist on a web site is accessible to every couple in Toronto who is thinking of coming to one of our hotels, and to every group of lawyers in Philadelphia who are looking for a convention centre where they can also play golf. It they don't like what they read, they will go to the Bahamas, Cayman and Havana. Every international business in Bermuda is fully informed about the taxation and regulatory environment not just here, but in New Hampshire, in Dublin, in Mauritius. And globalisation increases the pace of change. With a stroke of a pen in Washington, the United States can move to make its corporate tax system more competitive. Those jurisdictions that hope to attract and retain international businesses will have to ensure that the package they are offering remains attractive.

Second, we need to be clear about, and exploit, our chosen niche - which surely is to be at the top end, in terms of both quality and reputation, of whatever we do: currently, financial services and tourism. Neither our size nor our wage levels indicate that we should be looking to mass markets. We are above all a quality destination, a quality jurisdiction. So nothing but the best service in our hotels and restaurants, nothing but the cleanest bill of health from the regulators, nothing but the most efficient supporting services, nothing but an unsullied reputation for probity, will do. Every act of kindness to a tourist in distress, every shady businessman discouraged from setting up in Bermuda, every child educated to understand that the world will not owe them a living for nothing, will contribute to our success story.

Third, the relationship with the United Kingdom will become more complex.

Most of the constitutions of the Overseas Territories were written for an earlier and simpler time, when it made good sense to distinguish internal affairs from external affairs and to leave the local administration in charge of internal business other than internal security and the police. Now, the UK has an array of responsibilities that bear directly on internal affairs. Counter-terrorism, global financial stability, organised crime, aviation and maritime security, international agreements on human rights and protection of the environment recognise no boundaries, not even those of islands. With good sense and good will on both sides - and those qualities are much in evidence here in Bermuda - this complexity need not evolve into confrontation, but it does mean that the relationship needs careful management.

And fourth, just as choices are being made out there, Bermuda too faces some choices.

It would be wrong to see us as entirely in the hands of fate. Quo Fata Ferunt should be taken as recognition of the strength of outside forces, but not as resignation of free will. The forces of globalisation are not so strong that small jurisdictions are going to be swept away on a tide of cultural uniformity. Throughout human history, exposure to outside influence has tended to enrich, rather than to impoverish, individuals and societies. And the stronger those societies, the more they can be in control and ensure that what they value most is preserved.

So it is up to Bermuda to decide how crowded this island and its roads should be; how Bermudian it should remain; how many hours we should work; how we should raise our children. These are all judgments for Bermuda to make. The choices are not right or wrong in some absolute sense; they just mean different futures for Bermuda. The only error would be to fail to choose.