Beatles, Everton FC, Lusitania and River Mersey; they are all hallmarks of Liverpool and made it once famous. But the question is whether or not Liverpool connects to and fits into the world of new economic geography and if so, then how. Furthermore, can Liverpool be one of the famous textbook examples of agglomeration forces and trade like Chicago? Concerning these questions, I will do my best to show that the story of Liverpool is far more intriguing than one thinks at first and it is worth to be taught since it has strong links to theory.
Once upon a time, the place of Liverpool was a muddy, fishermen’s village, until all of a sudden King John decided to make a new borough with a new port on it to trade with Ireland. The port was a kind of agglomeration force; a couple of settlers arrived and settled down. Thus the village grew but after some time it reached a steady state and stayed unimportant compared to the nearby centre, Chester. The economy has been in a stable equilibrium for centuries with a population around 1000 people.
Then an accident happened again, the location of Liverpool became more valuable when trade evolved with the 13 British Colonies of America. To preserve this preciousness the first commercial wet port was built here, which allowed the ships to be unloaded and uploaded anytime of the day regardless of the tide. Of course, this invention attracted more and more ships, which is a good example of cumulative causation: the wet port was established in Liverpool because there were many ships as a result of trade with the colonies and more and more ships arrived to Liverpool because the wet port was there. Later, a large amount of profit was realised by the local merchants due to slave trade in the 18th century. The slave trade line was in fact a triangle connecting Liverpool, Africa, and America. In spite of its success, the business with the colonies was suddenly terminated when the American War of Independence broke out. Interestingly, this shock – that is losing one of the most important trade partners – could have led to the end of the golden days of the city, yet, it did not happen. Liverpool also kept its major position even when the slave trade was abolished, as the trade of tobacco, cotton, sugar, and other goods easily substituted it.
Steam ships were invented in the 19th century and eventually became common on the seas. The docks of Liverpool – since they were not deep enough – were not appropriate for these ships. In answer to this, the city quickly overcame the technological shock by establishing new ports to be able to serve steam ships. From this time on, hundreds of people travelled to North America from Ireland and Eastern Europe via Liverpool, which was at this time the second largest port in the country.
In the First World War Liverpool docks were very busy building ships, and the city itself was still very vivid. In contrast, between the two world wars, world trade declined and so did Liverpool. A few years later, in the Second World War, the location of the city became favourable again: troops, food and weapons arrived from the USA to Liverpool. Unfortunately, its importance made the city a major target of the German air force, which bombed it several times.
After the war, Liverpool never recovered. Containerisation was then the new wave in shipping and there was not any dock where these containerships could port until the 1970s so the city soon found itself on the margin. Furthermore, United Kingdom enhanced trade with the European Union, joining it in 1973, thus ports on the Southern and Eastern coast of the country benefitted, and for the first time, Liverpool was on the wrong side of the country. The companies, once located near Liverpool moved closer to the centre of the EU thus the agglomeration force in the city declined. Since that time, the economy of Liverpool reached an equilibrium again, but at a lower level, with a population of 435 000 people.
Focusing on the future: will the story be a fairytale? Certainly, nothing can be declared, but the Objective One Merseyside program of the European Union between 1994 and 2008 probably enforced the agglomeration forces of the city with its projects. Moreover, a new container dock is planned for extra huge containerships. However, it is still doubtful whether these projects can offset the handicap of being far from most of the EU members.
To give you an overview of the last centuries, here states a graph of the population of Liverpool.
Source: Liverpool Core Strategy Preferred Options 2010
All in all, location matters. What seemed to be a perfect position for centuries can become a disadvantage after all, due to some accidents of history, just as in the case of Liverpool. Some events do not even have an effect, but some affect the economy very intensively and move it to a new equilibrium. And if the agglomeration forces deteriorate, the size of the particular city will decrease. Good luck, Liverpool.
Lambert, T. (2012). A Brief History of Liverpool.
ScouseTimes (2011, February 13). Special Lost Dock ofLiverpool
LiverpoolCore Strategy Preferred Options 2010. (n.d.) p. 32.