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The development of theWelsh economy since the 18th century has largely been concentrated on themining industry during theIndustrial revolution in Wales, with the economy largely dependent on agriculture in centuries prior. TheWelsh slate industry once was the world's largest, and Wales' significantcoalfields led to the industry transforming many parts of Wales. Wales experienced de-industrialisation in the late 20th century, becoming more of aservice economy to the present day.
Until the mid 18th century, economic development in Wales was restricted by its peripheral location, predominantly upland topography, bad communications and sparse population.[1] Commerce was most advanced in the small coastal ports that had regular commerce withBristol orLiverpool; the other major sources of external trading contact were thedrovers, who drove cattle fromMid Wales alongDrovers roads for sale and slaughter in theEnglish Midlands and London'sSmithfield Market from the 14th century onwards. The drovers were instrumental in establishing the first banks in Wales, such asBanc Y Ddafad Ddu ("Black Sheep Bank") inAberystwyth.[1]
Industrial development from the mid 18th century was stimulated by the potential of Wales' rich mineral deposits, the arrival of English entrepreneurs and financiers and advances in technology. The development of ironsmelting bycoke made theSouth Wales Valleys a natural industrial location during theIndustrial Revolution and, from the mid 18th century, increased demand for metals and coal was generated first by war and later by the advent of steamships and railways.[1]
The northern rim of theSouth Wales Coalfield, focused onMerthyr, became Britain's foremost iron-producing district in the second half of the 18th century, while the south-western part of the coalfield, aroundSwansea, emerged as an important centre ofnon-ferrous metal smelting andtinplate production.Metallurgical industries required ever increasing quantities of coal, which was initially largely mined for this purpose. However, coal mining for sale developed in earnest from the mid 19th century and this was to become thesignature industry of the region, transforming the economic and social landscape of the South Wales Valleys.[1]
Although a much smaller industry than coal, theslate industry in Wales became the world's largest supplier in the 19th century and had an enduring impact on the landscape ofNorth Wales.[2] At its height in the 1890s, there were dozens ofquarries employing around 15,000 men, although they suffered from theboom and bust nature of the construction industry.[2] As most of the workforce were drawn from rural, Welsh-speaking communities, slate quarrying was described by one historian as "the most Welsh of Welsh industries".[2]
Despite explosive growth in the early 1900s, by the 1920s it was apparent that Wales was facing economic difficulties, largely because of its reliance on olderheavy industry rather the newer, growinglight industry sectors that were becoming established in the more prosperous parts of England.[3] Even during a boom period at the start of the 20th century, Wales had a narrow economic base dependent on thelabour intensive exploitation of natural resources. The Welsh export economy collapsed during theinter-war recession, a victim of increasingprotectionism and the rise of new competitors overseas. As globalterms of trade changed, unemployment in the South Wales Valleys soared to unprecedented levels during theearly 1930s (up to 59% inMerthyr and 76% inPontypridd), despite the exodus of 400,000 people from the region between 1921 and 1939.[4]
In the post-war era, the steel and tinplate industries consolidated on a smaller number of larger sites, such as the new works at Port Talbot andLlanwern.[5] TheNational Coal Board, created in 1947, tried to modernise the Welsh coal industry but the number of pits in South Wales shrank from 115 in 1953, producing almost 21 million tons, to 34 in 1981, producing 7.7 million tons.[5]Pembrokeshire andSwansea Bay became centres of thepetrochemical industry and new light industry was attracted to locations throughout Wales.[5] Wales attracted an above average share of theforeign direct investment (FDI) into the UK from the 1970s onwards but many of the new plants established by foreign firms were essentially "branch factory" operations offering low-wage, low-skill employment opportunities.[6][7] In 1971Sir Julian Hodge founded theCommercial Bank of Wales (later renamedBank of Wales) but the company was later taken over byHBOS and the brand dropped in 2002.
In the post-war decades there was a shift towards service sector employment, which accounted for 60% of jobs by the 1980s, many of them held by women.[5] The concentration of official agencies in Cardiff increased the amount of bureaucratic public sector employment: Governmentregional policy brought various national bodies to Wales: theRoyal Mint moved toLlantrisant,Companies House to Cardiff and theDriver and Vehicle Licensing Centre to Swansea.[5] From the 1970s on, the steel industry contracted, with works atEbbw Vale,Shotton and East Moors in Cardiff closing and layoffs elsewhere. Theearly 1980s recession had a bigger impact in Wales than in other parts of the UK: between 1979 and 1982, Wales lost 130,000 jobs[5] and the employment rate fell to 62%.[8] Recovery started later in Wales, and structural changes left a legacy of high unemployment amongst older men, especially in the Valleys.[8]
Wales lags well behind the financial city of London, but according to theWorld Bank, in 2019Wales' GDP /capita was better than 127 other nations.[10] Over the long term, output and productivity growth in Wales has been broadly in line with the UK and the developed world as a whole. What has marked Wales out is a low activity rate compared to other parts of the UK.[11]
| Year | £ million | £ per head | Index of £ per head (UK=100) |
|---|---|---|---|
| 1989 | 19,445 | 6,810 | 85 |
| 1990 | 20,990 | 7,335 | 84 |
| 1991 | 21,724 | 7,561 | 83 |
| 1992 | 22,659 | 7,874 | 83 |
| 1993 | 23,697 | 8,218 | 83 |
| 1994 | 25,049 | 8,675 | 83 |
| 1995 | 26,388 | 9,135 | 84 |
| 1996 | 27,518 | 9,517 | 82 |
| 1997 | 28,672 | 9,904 | 80 |
| 1998 | 29,787 | 10,273 | 79 |
| 1999 | 30,736 | 10,596 | 77 |
| 2000 | 31,898 | 10,973 | 77 |
| 2001 | 33,525 | 11,520 | 77 |
| 2002 | 35,252 | 12,074 | 77 |
| 2003 | 37,262 | 12,712 | 76 |
| 2004 | 39,340 | 13,352 | 76 |
| 2005 | 40,711 | 13,784 | 76 |
| 2006 | 42,697 | 14,396 | 75 |
| 2007 | 44,263 | 14,853 | 74 |
| 2008 | 45,610 | 15,237 | 74 |
| 2018 | 65,089 | 20,815 | 70 |
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