Monday, January 20, 2014

São Paulo, South America’s Economic Engine

article from March 21, 2011
By Jamie Douglas

US President Barack Obama’s visit to Brazil over the weekend underscores the importance Brazil has achieved. Long neglected by the United States in matters of trade, despite tremendous growth under President Luiz Inácio Lula da Silva, who served from 2003 until 2011, when the current administration of Dilma Rousseff took over, China has become Brazil’s leading customer, far surpassing what the USA is importing from the world’s most powerful emerging market.

In fact, the USA, with its agricultural subsidies, has attached very punishing protectionist duties to two import commodities from Brazil: sugar and ethanol. Just recently, the US Congress voted to extend a US$0.53 per gallon duty for imported Brazilian ethanol to protect its own emerging ethanol industry, going against all the free market economic principles it preaches throughout the world. And it must also be stressed that Brazil’s ethanol industry is one of the oldest in the world, being based on sugarcane, rather than on edible grains like the US’s source, and thereby does not contribute to world hunger.

Brazil’s new crude oil and gas discoveries suddenly make it the USA’s new best friend in the hemisphere, after relations between Caracas and Washington took a nosedive with the pseudo-dictatorship of Hugo Chávez in Venezuela, who is holding on to power on the backs of the very poor masses in that country with the promises that he made when crude was hitting close to US$150 per barrel – promises he cannot keep.

Economic Capital of South America

While President Obama is visiting Brasilia, the capital, and Rio de Janeiro, which will be hosting the 2014 World Cup and the 2016 Summer Olympics, it is São Paulo that is the true economic capital of the country and all of South America. Home to the São Paulo Stock Exchange, the Futures Markets, and the Cereal Market Stock Exchanges, the city hosts the second largest stock exchange in the Americas. It is also the world’s fifth largest city, with a metropolitan area population in excess of 20 million people.

Growth of São Paulo

The city of São Paulo was founded in 1554 by Jesuit missionaries Manuel da Nóbrega and José de Anchieta along with the local Tibiriçá Chief, with the stated purpose of converting the Tupi-Guarani indigenous Brazilians to the Catholic faith. But it was not until the abolition of slavery in 1888 that a huge wave of immigrants from Europe arrived, lured by generous land grants, to “whiten the race,” as some of the leaders of Brazil feared that with the millions of freed slaves, the nation would become completely Africanized.

São Paulo’s growth really went into overdrive in the early part of the 20th century, when it started developing as the financial and business center of Brazil. According the PricewaterhouseCoopers, the Greater São Paulo area was the world's 10th richest city in 2008 and will be the sixth in 2025 behind Tokyo, New York City, Los Angeles, London and Chicago. As a consequence of this, it has become the Latin American home of many multinational corporations, and therefore hosts hundreds of thousands of expats from all over the world, including the largest Japanese community outside of Japan.

Big-city realities

Some refer to São Paulo as the “Helicopter City,” as at any given moment a look up will show you a number of the whirlybirds in transit from high-rise heliports to other high-rise heliports, as busy executives cannot allow themselves to become entangled in the chaotic street-level hustle and bustle of everyday goings on, thereby also avoiding the constant threat of kidnappings, an ever-present concern for the wealthy in Brazil.

This brings up one of the negatives, which you will find in almost all large metropolitan areas in developing countries, which is the high rate of crime, a result of the enormous income inequality and the large number of very poor people who live in favelas, the Brazilian word for “slum.” However, the murder rate has recently been reduced from the world’s highest, while the rate of solving murders has increased from 8% to 70% over the last two decades, bringing about a decrease in violent crime and an impressive reduction in the homicide rate of 67%. The overall homicide rate is now just a quarter of Rio de Janeiro’s.

Then there is the pollution, which is massive, as can be expected in a city of this size. But São Paulo is addressing the problem by utilizing driving restrictions similar to what Mexico City instituted some years ago. And to combat the street chaos, the city has built one of the most modern and efficient mass transit systems anywhere, which is well maintained and has helped to keep tens of thousands of vehicles off the roads every day.

Because of its wealth, São Paulo has also become a cultural center, with many museums and concert halls, holding numerous events throughout the year that bring people to parks and the city centers (there are several CBDs). São Paulo is also host to the Brazilian Grand Prix, Indy Style Racing, Polo and Horseracing and of course is home to several fútbol teams. An ultramodern superhighway connects the city with the beaches, replacing the old “Highway of Death” (it seems every country in Latin America has at least one of them).

Additionally, the city is home to some of the best medical care in the world, with the Albert Einstein Israelite Hospital standing out as the leading institution. And educational opportunities here are second to none for this nation of almost 200 million people.

São Paulo for expats

São Paulo offers expats so many diversions and recreational opportunities that it would take someone several lifetimes to experience it all and still hold down a job. As a foreigner, great care must be taken for personal safety. The usual rules apply. No flashy jewelry – leave your Rolex at home in the safe. While driving, do not leave your windows down, and when carrying a briefcase or purse with you, put it out of view, as recently there have been a rash of assaults on motorists at intersections of the “smash and grab” variety. But overall, the safety situation is improving, with more and more public safety officers being placed in strategic locations where they keep an eye out for suspicious-looking types, driving them away either by intimidation or paddy wagon.

If you are being transferred to or are otherwise considering moving to this marvelous metropolis, you are sure to find many ways to fall in love with the great variety that life has to offer there, from food to recreation.

Enjoy São Paulo!

Jamie Douglas
Patagonia

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.