Economic history of Scotland

The economic history of Scotland charts economic development in the history of Scotland from earliest times, through seven centuries as an independent state and following Union with England, three centuries as a country of the United Kingdom. Before 1700 Scotland was a poor rural area, with few natural resources or advantages, remotely located on the periphery of the European world. Outward migration to England, and to North America, was heavy from 1700 well into the 20th century. After 1800 the economy took off, and industrialized rapidly, with textile, coal, iron, railroads, and most famously shipbuilding and banking. Glasgow was the centre of the Scottish economy. After the end of the First World War in 1918, Scotland went into a steady economic decline, shedding thousands of high-paying engineering jobs, and having very high rates of unemployment especially in the 1930s. Wartime demand in the Second World War temporarily reversed the decline, but conditions were difficult in the 1950s and 1960s. The discovery of North Sea oil in the 1970s brought new wealth, and a new cycle of boom and bust, even as the old industrial base had decayed.

Scotland is roughly half the size of England and Wales, but has only between a fifth and a sixth of the amount of the arable or good pastoral land, which made marginal pastoral farming and, with its extensive coastline (roughly the same amount of coastline as all of the rest of Great Britain at 4,000 miles), fishing, the key factors in the pre-modern economy. Only a fifth of Scotland's land is under 60 metres above sea level. Its east Atlantic position means that it has very heavy rainfall: today about 700 cm per year in the east and over 1,000 cm in the west. This encouraged the spread of blanket peat bog, the acidity of which, combined with high level of wind and salt spray, made most of the islands treeless. The existence of hills, mountains, quicksands and marshes made internal communication and conquest extremely difficult.

Mesolithic hunter-gatherer encampments are the first known settlements in the country, and archaeologists have dated an encampment near Biggar to around 8500 BC.Neolithic farming brought permanent settlements, and the wonderfully well preserved stone house at Knap of Howar on Papa Westray dating from 3500 BC predates by about 500 years the village of similar houses at Skara Brae on West Mainland, Orkney. From the commencement of the Bronze Age to about 2000 BC the archaeological record shows a decline in the number of large new stone buildings constructed. Pollen analyses suggest that at this time woodland increased at the expense of the area under cultivation. Bronze and Iron Age metalworking was slowly introduced to Scotland from Europe over a lengthy period. Scotland's population grew to perhaps 300,000 in the second millennium BC.

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