Bermuda has traditionally paid a great deal of attention to the fundamentals needed for economic success, says the chief executive of the Royal Dutch/Shell Group of Companies in Bermuda.

Speaking at the Hamilton Lions weekly luncheon, Robert Stewart, who recently published his first book "Bermuda: An Economy that Works,'' said leading factors in the Island's success had been acceptance of capitalism and public confidence in private enterprise.

The book, a collection of 80 essays, explores why Bermuda's economy has been so successful.

Respect for the law, private property and contract rights were other ingredients in the Bermuda story, he said.

Still other factors were tight control on Government spending, a Bermuda dollar tied to the US dollar, modest Government debt, a tax-friendly regime, and no central bank to expand the money supply and create runaway inflation.

The right of appeal from the domestic legal system to the Judicial Committee of the Privy Council in the UK was another significant factor in Bermuda's success story, he added.

"Not many people know this, but it is the right of appeal that led many Hong Kong companies to (redomicile in) Bermuda,'' he said.

"It is political stability, market-friendly institutions and limited government which provide the necessary ingredients for economic success.'' The Island's success had come despite its small size and lack of natural resources, traditionally considered necessary for economic wealth.

But, said Mr. Stewart, evidence suggested it was the small countries that were better positioned to thrive economically.

Bermuda, with its 1996 per capita income of about $27,500 per year compared to the US's $24,753, was just one example of a small country with an excellent economy, he said.

Monaco and Luxembourg were other examples where size and supply of natural resources had little connection to wealth.

"In 1996, the World Economic Forum and the International Institute for Management Development issued a list of countries ranked according to which were the most competitive.

"Of the top 25, only ten could be classified as big countries and the other 15 were small countries like Singapore,'' he said.

For large countries, politics often blocked prosperity, he said.

As evidence of this, Mr. Stewart said that many individuals from the world's largest countries routinely prospered in other jurisdictions.

Mr. Stewart said: "The future rests with small countries not large states.'' He also said that more and more intellectual capital was the greatest asset for any country.

BUSINESS BUC