Building 21st Century Cities: Urban Development in Brazil

One of the most important phenomena transforming the world economy in the 21^st century is the urbanization of emerging market countries. Whereas industrialized nations in North America, Europe and East Asia underwent a broad transition to urban life during the 1900s, most people in the rest of the world continued to reside in rural areas, working mostly as farmers. I have written previously about the importance of urbanization to economic development. In essence, urbanization is the most radical change to occur in human society since we shifted from migrant hunters and gatherers to stationary farmers many millennia ago. It enables economies to shift from subsistence agriculture to higher-productivity manufacturing and service activities, which allows for more specialization and, therefore, a more diverse array of work opportunities that leads to greater wealth creation. The overall trend line toward urbanization is very clear, as this chart illustrates:

This second chart also illustrates how major emerging markets are still catching up to the West, with middle-income countries such as Brazil already well along in the process:

How emerging markets handle this urbanization process will go a long way toward determining the structure of the global economy. Building efficient, productive cities that provide necessary public services and a high quality of life will be the key to unlocking the potential of the world’s low- and  middle-income nations.

Nowhere is the need for effective urban planning clearer than in Latin America. The region is already the most urbanized in the world, with 80% of residents living in cities. (This number is expected to grow to 90% by 2050, slightly ahead of the U.S. and Europe, as the previous graphic illustrates.) Latin America has long been famous for its poorly-organized megacities such as Santiago, Mexico City and São Paulo: chaotic, congested urban areas known for a high prevalence of dangerous crime, environmental degradation, and sprawling shantytowns. Latin America experienced its urban boom in decades when public administration was weak and local governments were ill-equipped to deal with the influx of new residents. Municipal planners have been forced to play catch-up ever since. Changing Latin America’s historical path of urban development is a vital task in the region’s quest to converge with the living standards of the West.

As the most prominent and populous country in Latin America, it is no surprise that Brazil is home to the greatest number of urban centers in the region. The McKinsey Global Institute recently published a study highlighting the “Emerging 440” cities in the developing world that are expected to generate nearly half of global growth in the 21^st century. Of the 54 Latin American cities to make the list, 27 are in Brazil. In addition to its 25 “middleweight” cities such as Goiania, Manaus and Porto Alegre, Brazil is also home to 2 of the world’s 27 megacities, São Paulo and Rio de Janeiro. (Latin America has 2 other megacities, Mexico City and Buenos Aires.) Outside of McKinsey’s “Emerging 440”, with its emphasis on large cities, Brazil is also developing many smaller regional cities. In my state of Minas Gerais, for example, Belo Horizonte is the main city located in the center, but there are other growing urban areas such as Governador Valadares in the East, Montes Claros in the North, Juiz de Fora in the South, and Uberlândia in the West. With its sizeable number of large, medium and small cities dispersed across the country, Brazil thus has a strong urban base to serve as the motor for the country’s economic development. The trick moving forward will be to create effective urban administration to unlock productivity gains and improve living standards.

Brazil’s Urban Challenges

Take a quick visit to any of Brazil’s major cities and the scope of the country’s problems becomes quickly evident. These urban areas tended to develop in a very chaotic fashion, with patchy public services such as electricity, clean water, waste collection and sewage treatment. Housing is clearly lacking, and many poorer residents have resorted to building makeshift slums on occupied territory, leading to the country’s infamous favela problem. Transport infrastructure is also lacking, leading to disorderly and confusing neighborhoods where narrow roads twist and turn without any clear overarching structure. There is little to no effort at urban zoning, meaning that residential houses, nightclubs, factories, stores, and other properties are all interspersed throughout the city in no coherent order, making the organization of the city that much more challenging.

While these issues have always been a problem for Brazil, they have become painfully acute in the last decade as a growing middle class upends traditional urban structures. As befits one of the most historically unequal countries in the world, Brazil’s cities have long been defined by the gap between the haves and the have-nots. The country’s glaring wealth gap has often shocked foreign visitors who have difficulty in adjusting to the jarring views of luxury apartments located next to sprawling favelas, as in the following picture:

Yet Brazil’s ongoing economic transformation is beginning to render such traditional depictions obsolete. While the country remains extremely unequal, it is increasingly becoming defined by its growing middle class, which just a few years ago became the majority of the country’s population. The growth of this consumer class has led to explosive demand for automobiles, housing and electricity. Brazil’s municipal governments are now under greater pressure than ever to provide quality roads and public transportation, build residential areas with access to clean water, energy, and sewage, and design effective public health, education, and policing systems. Whereas Brazil’s wealthy families have traditionally eschewed the government to pay for their own services and its poor families were accustomed to being ignored or mistreated, its emerging middle class has raised expectations for what local government can and should provide for its citizens.

One of Brazil’s greatest challenges to improved urban planning is the inherent difficulty involved in redesigning cities that are already highly populated. It is difficult to design new roads, communities and public transport when that would involve tearing down and rebuilding certain parts of urban centers. Whereas China has prepared large urban infrastructure projects in sparsely populated cities in expectation of future migration booms, Brazil is trying to accomplish the feat after, not before the fact. (China’s approach is not without its own problems, as many have criticized the country for an unsustainable building boom in ghost cities, creating a bubble that is sure to pop.) Therefore, in addition to the basic challenge of organizing its cities, Brazil faces the additional difficulty of having to integrate pre-existing communities into its design.

Integrating the Favelas

Nowhere is this challenge more apparent than in the favelas. Long the centers of urban violence and drug trafficking, Brazil’s favelas often operate as independent states where local authorities do not dare enter. This exacerbates crime issues and also makes life difficult for the slum residents who are often forced to live in fear. In order to change this situation, the Rio government has been implementing a favela pacification project as part of its World Cup and Olympic preparations. With help from the army, it has sent police pacification units into 26 local favelas near the city’s famous “South Zone”, along the beaches of Ipanema and Copacabana. The goal of the pacification units is to push out the drug traffickers and create space for the local government to move in and integrate the communities into the rest of the city. If successful, the pacification policy may end up being replicated in favelas across Brazil.

So far, there have been both positive and negative signs. Increased provision of public services shows that the communities are indeed becoming integrated into the city. The municipal electric utility has seen its number of clients explode, with 160,000 new individuals connected to the grid and delinquency rates falling from 59% to 10.6%. The government is also working to hand out property titles to favela residents in the occupied communities, thus validating their home ownership. Banks are beginning to install branches in the favelas, providing access to credit, and a new gondola in Complexo do Alemão has offered a new, innovative form of transportation for residents of the isolated, hilltop community. Perhaps most important of all, crime is on its way down, making the notoriously dangerous city significantly safer.

Yet not everything has gone smoothly. Conflicts between favela residents and police units have led to tension in the communities, and sporadic outbreaks of violence still occur. There are increasing worries over gentrification, as wealthier individuals move into the community and drive up prices, breaking up traditional social structures and forcing residents to the city’s periphery. There have been other complaints about more direct government bullying, as favela residents are pushed off their property to make room for new projects for the World Cup and Olympics. The pacification forces have also created a new problem: renegade police militias that take over the communities and repeat the violent, corrupt rule of their drug trafficking predecessors. Marcelo Freixo, a current candidate for mayor from the hard-left PSOL, built his political career on investigating and criticizing state and local government complicity in the city’s burgeoning militia problem and was profiled in the popular film "Elite Squad: The Enemy Within". The final drawback to the occupation policy is that, unsurprisingly, pushing the drug traffickers out of one region has simply made them pop up in other clandestine areas, further away from government control. Instead of solving the problem of urban crime and the drug trade, the pacification units simply relocate it.

Despite the drawbacks, the pacification policy seems to me to have been a major success. The remaining problems—police corruption, gentrification, drug-related crime—are fundamental issues of urban society that no country has been able to completely solve. The pacification policy was not designed to end crime or inequality, but rather to reduce it by providing the overall security cover to slowly integrate slum communities into the rest of the city. In this respect, it is clearly moving in the right direction. Violent crime is down, public service access is up, and the occupied favelas no longer operate as separate states-within-a-state. The real test of the policy will come after the Olympics when the pacification units withdraw, to see if the integration becomes self-sustainable. If so, one of Brazil’s urgent priorities will be to replicate it across the country. Occupying 26 favelas is a promising start, but it is just a drop in the bucket when one considers the hundreds of major slum communities still under control of the traffickers. Favela integration will be a long and difficult process.

Other Major Issues: Developing the Periphery, Sustainability, and Innovation

Although favelas may get all the international publicity, there are other integration problems facing Brazil’s major cities that are perhaps more important. Chief among these concerns is the integration of the periphery. While the country’s elite tend to live in luxury high-rises in the city centers, the growing middle class has been forced to look for affordable housing in less convenient areas further away from the center. Current transportation structures are designed on a “hub-and-spoke” model with all activity and transport flowing between the center and individual communities along its edges. This leads to huge amounts of congestion and inefficiency in terms of transportation. (This is a problem faced by urban planners all over the world.) New roads and public transportation systems will have to be designed that emphasize circular, ring-based patterns that allow for transit to flow in different directions and enable more interaction between communities on the periphery. To have an idea of what such design would entail, here are two contrasting pictures of the São Paulo metro (hub-and-spokes) and the Beijing metro (more circular design):

São Paulo Metro

Beijing Metro

A similar effort will be needed to build “beltway” ring roads that allow traffic to move circularly around the city as opposed to moving through the city center. Such systems are standard in the U.S., Europe and East Asia. This will greatly improve urban transit flows and reduce Brazil’s congestion problems. Once again, a comparison between the São Paulo city map and the Beijing city map is useful to understanding visually the different road structures of the two cities.

Another issue Brazil faces is its need for sustainability, particularly better environmental enforcement to improve urban air quality and limit pollution. I am often struck here by the low standards for truck emissions and the thick hazes of smog. Yet in this aspect, the country is moving in the right direction, albeit slowly. São Paulo now requires emissions checks for vehicles, a practice that should become more widespread and rigorous over time. More investment will need to be made, however, to upgrade truck fleets to more modern, low-emissions vehicles. There is strong public demand for more bike paths and metro systems, and the fact that these topics are increasingly becoming part of the national conversation shows Brazilians’ desire to switch to lower-polluting forms of transport. Also, as I have obviously mentioned many times before on this blog, Brazilian cities struggle with their waste management and low overall recycling rates. The main urban centers have also tended to neglect their rivers and inadequately treat their sewage, making waterways such as São Paulo's Tiete inhospitable and reducing opportunities for pleasant urban green space such as riverside parks. On a positive note, the country’s reliance on hydroelectric power means that power plant emissions remain quite clean, making air quality better than it would otherwise be. Overall, when it comes to the sustainability of Brazilian cities, there are both positives and negatives, and many challenges ahead. Like other countries across the world, Brazil has much work to do to make its cities greener, more livable, and more sustainable.

In addition to better planning and infrastructure, Brazil also needs to embrace innovation in its urban development process. The rising number of global cities offers opportunities for exciting local experimentation to solve issues faced in urban areas across the world. Rather than simply copying existing Western models of urban planning, Brazil should embrace new technology (especially digital IT systems), encourage individual cities to test new approaches, and promote the replication of successful pilot projects. Brazil has a good track record in this area. Perhaps the most famous example is Bus Rapid Transit (BRT), a system of high-speed bus lanes and stations that was pioneered in the southern city of Curitiba. BRT was so successful that it was eventually implemented in major cities such as Los Angeles, Beijing and Bogotá. Brazil is now working to install the system in 11 other major cities, including São Paulo and Rio. Another example is the IBM “Smarter City” command center recently installed in Rio, which serves as a focus point for coordinating the city’s crisis response and infrastructure systems. On a more personal note, Belo Horizonte’s inclusive waste management system that promotes the integration of catadores has also served as a model for similar efforts across the globe and is the reason I wound up in this city. These examples of experimental local projects highlight Brazil’s potential for innovative thinking and ability to pilot test new ideas in 21^st century urban development.  

Municipal Elections and the World Cup: A Country at a Crossroads

As Brazil gears up for a new round of municipal elections this October and the World Cup in 2014, urban development has become a hot topic of discussion. The Brazilian government portrayed its role as a host country as a chance for the nation to embark on a wave of modernization projects to bring its cities into a new era, making big investments to lay the foundation for major productivity gains and sustainable development. In many ways, this could be Brazil’s biggest chance to overcome its history of urban mismanagement and announce the country’s emergence on the world stage. And candidates from across the political spectrum are currently running across their cities, vying for the chance to be the leaders to turn this dream into a reality.

Construction has certainly been booming in preparation for the events, but progress has been slower than many had hoped for. Officials from FIFA (the international soccer federation) have gotten into public spats with their Brazilian counterparts, complaining about the lack of adequate preparation and repeated delays to projects. As many projects fall behind schedule, people are beginning to worry that the country is squandering its chances to finally overcome its urban development issues. And in some cities, particularly Rio, there are complaints that many projects have been poorly planned to meet the country’s real needs, and that instead of untangling congestion problems, they will end up as mere white elephants. While the national government may talk about increasing investment and innovation, in practice it has done little to reduce the nightmarish bureaucratic processes that lead inevitably to delays, cost overruns, and uneven planning. Even among its Latin American peers, Brazil’s implementation record remains weak. Whereas São Paulo and Mexico City started to construct their metros at the same time, São Paulo has only 71 km of lines, whereas Mexico City boasts more than 200 km. Improving upon this sort of weak track record will require a major overhaul in public administration. This is not something that can change overnight, even for an event as urgent as the World Cup.

Over the long run, however, Brazil’s chances still seem bright. The World Cup will result in major upgrades to local roads and airports (as well as the favela integration project) that will form important first steps for the country. And democratic pressure is increasingly holding local government officials responsible for providing results. Improving urban transport and public services is a nonstop complaint among local Brazilians, and is the first topic to appear in nearly all mayoral debates and television ads. Recent polling data shows that candidates’ voter support is very directly tied to the perceived effectiveness of the administration in office, meaning that the public is doing a relatively good job keeping track of the government’s performance and promoting accountability. The more that public pressure grows, the more that business-as-usual will become an unacceptable approach for government officials.

Urban development is never a sudden process. It is built slowly over time, developing more effective public administration to reduce corruption, invest in infrastructure, provide public services, integrate communities, promote sustainability, stimulate innovation, and enhance democratic accountability. Brazil is clearly making progress on these fronts, although major hurdles remain. It will be up to the country’s next crop of mayors to build productive, efficient cities that enhance the country’s economic activity and improve quality of life for its citizens. While much of the world’s focus may be on actions by the national government, it may be local government that ends up making the most important stimulus push of all.