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10. São Paulo: A growth process full of contradictions

Development of a metropolis
Metropolitan involution
Quality of life in the state of São Paulo
Metropolitan problems
Public administration
The future

Milton Santos

The metropolitan region of São Paulo is a giant agglomeration consisting of 39 municipalities which together contain some 17 million people (figure 10.1). It is an economic powerhouse which contributes around 30 per cent of Brazil's gross national product. São Paulo's 2.1 million manufacturing workers make it the second largest industrial city in the world. They represent around one third of the active population, a much higher proportion than that in any other large Brazilian city.1

Since the introduction of the motor car, urban expansion in São Paulo has followed a radial model. The radius of the built-up area did not exceed one kilometre until 1870; today, continuous urban development spreads 80 kilometres from east to west and 40 kilometres from north to south. Since 1980, the built-up area has been growing far more rapidly than the population (table 10.1). The city's land-use pattern has been strongly influenced by land speculation, which since the end of the last century, has ensured that the built-up area has expanded, leaving large areas of undeveloped space. This process has increased the price of serviced land and has helped accentuate social segregation.

Figure 10.1 Metropolitan region of São Paulo: Administrative divisions

Table 10.1 Growth of metropolitan São Paulo

Year Population
Growth rate
(annual %)
Urban area
Growth rate
(annual %)
1930 1.0 - 130 -
1950 3.0 5.6 420 6.0
1965 6.5 5.3 550 1.8
1980 12.5 4.5 900 3.3
1987 14.2 1.8 1,523 7.8
1991 15.2 1.8 n.a. n.a.
1994 16.0 1.8 n.a. n.a.

Source: Santos, 1990.

Development of a metropolis

São Paulo began to grow rapidly during the last quarter of the nineteenth century. It developed on the basis of coffee production and the "Europeanization" of the urban hinterland. Modernization transformed the productive structure, the transport and communications systems, and the consumption structure of the region, changes reflected in the city's built environment. São Paulo and its region responded to every shift in material culture in the metropolitan countries, eagerly adopting every new innovation. Indeed, for a century, the adoption of one new invention after another was the basis of São Paulo's virtually uninterrupted economic growth. The process of modernization firmly entwined the fortunes of the city with those of its state.

Until the 1960s, Brazil lacked adequate modern transportation and there was no national market. São Paulo supplied the south and south-east, the only region of the country with a well-developed system of ports, railways, and roads. When the Brazilian "miracle," the construction of Brasilia, and the opening of new roads into Amazonia finally unified the country, the São Paulo region benefited enormously. It became the undisputed economic centre of Brazil. Not only did its manufacturing and commercial activities thrive but it also developed into the country's main financial centre. Until 1960, finance had been mainly controlled from Rio de Janeiro, the headquarters of major public financial institutions such as the Central Bank and the National Bank for Economic Development. The transfer of these functions to Brasilia and the integration of Brazil into a single market gave São Paulo the opportunity it needed to take over.

Between 1968 and 1984, São Paulo banks increased their share of the country's total bank deposits from 26 per cent to 42 per cent (Cordeiro, 1988: 158). By 1985, 33 per cent of Brazilian banks had their headquarters in the city. Many important banks moved their main offices from Rio de Janeiro to São Paulo; by 1989, 18 of the 23 foreign banks operating in Brazil had their principal Brazilian offices in the city, only five in Rio de Janeiro (Cordeiro, 1990). The growing financial clout of the city attracted other economic activities; for example, the headquarters of the FIAT holding company was located in São Paulo in 1990.

If Rio de Janeiro still maintains its superiority in the cultural world, with a major television complex and almost all cinema production, São Paulo increasingly controls the country's advertising business. In the early 1980s, its advertising billings were already higher than those of Rio, and by 1985 São Paulo companies controlled two-thirds of the billings. Today, São Paulo contains 60 per cent of the major agencies and nine of the eleven agencies with more than 250 employees. It is also now the country's major intellectual centre, with the largest university and research complex in Brazil and with a substantial proportion of the major scientific publishers.

Today, São Paulo is not only Brazil's dominant economic centre but has established itself as a major world city. In the process, it has begun to change its form. Without losing its industrial importance, it has become a centre of services and the indisputable hub of commercial decision-making. As industrial employment has begun to move out to nearby cities, São Paulo has been transforming itself into an informational complex. This is reflected in the growth of technical, scientific, and artistic employment in the city. From 205,000 workers in 1971, the total rose to 460,000 in 1981 and 760,000 in 1990 (National Household Survey, 1971, 1981, and 1990). Whereas the city's total workforce increased by 119 per cent between 1971 and 1990, the labour force in informational activities increased by 271 per cent; this sector's share of total employment expanded from 6.3 per cent to 10.4 per cent during the same period.

In the process, São Paulo's share of Brazil's gross national product has declined from 25 per cent in 1970 to 20 per cent in 1987. This decline is the result of its loss of manufacturing activity, which fell from 44 per cent in 1970 to 31 per cent in 1987 (table 10.2). Although total manufacturing employment has not actually fallen, employment in other parts of the State of São Paulo has been growing much more quickly (see next section).

Table 10.2 Distribution of manufacturing industry in State of São Paulo, 1970-1987

Area 1970 1975 1980 1987
Greater São Paulo 74.7 69.4 62.9 60.0
City of São Paulo 48.2 44.0 34.8 31.1
Other municipalities 26.5 25.4 28.1 28.9
Rest of state 25.3 30.6 37.1 40.0

Sources: Industrial censuses for 1970, 1975 and 1980; Fundação SEADE/Estado de São Paulo, 1992, vol. 3: 190

São Paulo is now what Cordeiro (1988: 153) calls a "transitional metropolis," something completely different from an industrial city. Its functions and importance are no longer reflected in the mere flow of material goods, it now organizes those flows through its decision-making power and its control over information. São Paulo is therefore passing through its third phase of globalization. The first, based on commerce, began in the late nineteenth century and continued until the 1930s; the second, based on manufacturing, began in the 1930s and ended in the 1960s.

Metropolitan involution

During the 1980s, Brazil experienced an economic crisis. This crisis hit the large cities very hard but not all of the secondary cities. In the State of São Paulo, the smaller cities grew while the capital declined. This had a marked impact in terms of the spatial distribution of the state's gross internal product: in 1980 the São Paulo Metropolitan Area (SPMA) contributed 60 per cent of the state's income, while eight years later its share had fallen to 41 per cent (EMPLASA, 1980 and 1988).

Shifts in the location of industry were an important ingredient in this trend (table 10.2). Between 1980 and 1989, industrial employment grew by only 3 per cent in Greater São Paulo and by 18 per cent outside (Fundação SEADE/Governo do Estado de São Paulo, 1992: 103). Whereas value added in cities with less than 50,000 inhabitants grew by 2 per cent between 1980 and 1988, value added fell by 2 per cent in those with between 50,000 and 250,000 people, 11 per cent in those between 250,000 and one million, and 21 per cent in cities with over a million (O Estado de São Paulo, 28 January 1990). Average productivity and profitability were both lower in São Paulo than in many smaller cities (Azzoni, 1988). In 1980, profitability

(measured in terms of value added minus labour costs) was higher in Baurú, Campinas, Vale do Paraíba, São Jose dos Campos, Taubaté, and Ribeirão Preto than in Greater São Paulo. Since value added per worker was much higher in the smaller cities, Greater São Paulo's share of industrial employment fell less rapidly. Between 1980 and 1988, the number of industrial workers in Greater São Paulo fell from 64 per cent to 62 per cent of the total workforce (Folha de São Paulo, 27 November 1989).

The locational shift from Greater São Paulo was not confined to industrial activity. Whereas total employment in the metropolitan area increased by 13 per cent between 1980 and 1989, in the interior it grew by 19 per cent. The numbers of public workers grew by 27 per cent in the metropolitan area and by 73 per cent outside it (Fundação SEADE/Governo de Estado do São Paulo, 1992: 103). Only employment in financial services and the communications sector continued to grow more rapidly in the state's major city (Dedecca and Montagner, 1992).

The changes in location were all part of the transformation of space and society in the State of São Paulo. Modernization and a shift to a more technically and scientifically based economy had both encouraged this change.

Quality of life in the state of São Paulo

Thanks to industrial deconcentration, rising public-sector employment, the modernization of agriculture, and the introduction of the Development Programme for Intermediate Cities, the quality of life improved markedly in the interior of the state. Rates of infant mortality fell, more and more households were linked to the water and electricity networks, and the provision of hospital beds in smaller cities improved.

Indeed, by the 1980s, several indicators showed that the quality of life in the metropolitan area was worse than in the intermediate cities. In 1985, life expectancy was one year lower in Greater São Paulo and there was a vast difference in infant mortality rates: 31 babies out of every thousand died in the intermediate cities compared to 54 in the metropolitan area (Carvalho Ferreira, 1989). Literacy rates also showed marked differences; whereas 16 per cent could not read or write in the intermediate cities in 1982, the proportion in Greater São Paulo was 20 per cent.

The empirical evidence suggests that a process of "metropolitan involution" was operating. So many poor people moved to São Paulo that the city could not provide for them. The labour market became segmented between highly skilled and well-paid jobs and large numbers of unskilled and poorly remunerated activities. This was not a process of "urban ruralization," because recent migrants from the countryside did not cling on to their rural values and in any case many of the poor migrants came from urban areas. It was a sign that so-called urban civilization was extending its tentacles throughout Brazilian society; the problem was that the great economic metropolis could not cope.

Metropolitan problems

In the late 1960s and throughout the 1970s, São Paulo benefited from the rapid expansion of the Brazilian economy. The city became enormously richer and the size of its middle class increased dramatically. At the same time, poverty and the numbers of people living in poverty worsened. In 1990, São Paulo contained 10 per cent of Brazil's population and 11 per cent of its labour force, but also 20 per cent of persons earning more than 10 times the minimum salary. But, although it had a higher proportion of high-income people than any other Brazilian city - 48,000 families were earning more than US$100,000 per annum - vast numbers earned very little. Indeed, in 1990, 850,000 people earned less than the minimum wage. Unfortunately, the living conditions of the very poor have not been improving. Rather, the 1980s and early 1990s saw a deterioration in conditions in the metropolitan area: employment, housing, transport, education, health, and crime all got worse.

Employment and unemployment

Trends in employment and unemployment in Greater São Paulo between 1985 and 1993 reflect those in Brazil as a whole (table 10.3). After the difficulties of the early 1980s, rates of unemployment had fallen by the end of the decade, only to rise rapidly during the 1990s. By 1992, there were more than 1.2 million unemployed people in the city, 16 per cent of the economically active population. In addition, there were strong signs of a growth in casual forms of employment. The proportion of the labour force that was self-employed rose from 16 per cent in 1986 to 21 per cent in 1993. The proportion that was working without a work permit (carteira assinada) rose from a minimum of 19 per cent in 1989 to 23 per cent in January 1993 (Fundação SEADE, 1991 and 1993). The employment situation in Greater São Paulo has undoubtedly deteriorated.

Table 10.3 Employment and unemployment in Greater São Paulo, 1985-1993

Year Economically active population (000s) Unemployed (000s) Unemployment rate (%)
1985 6,415 795 12.4
1986 6,665 647 9.7
1987 6,871 666 9.7
1988 6,933 652 9.4
1989 7,100 596 8.4
1990 7,285 809 11.1
1991 7,553 899 11.9
1992 7,784 1,253 16.1
1993 7,948 1,224 15.4

Source: Fundação SEADE, 1993.
a. Estimate for July.

The unemployment problem is far worse in the periphery than in the municipality of São Paulo. The city's Blacks are also much more likely to be unemployed than other heads of household (Fundação SEADE, 1991 and 1993). Similarly, there are large numbers of young people engaged in casual forms of employment; in 1985, one in three workers under 18 years of age was employed without a work certificate. Nevertheless, it is not only the poor who are suffering; employment difficulties are also affecting skilled workers. For example, unemployment among workers with previous salaried work experience rose from 10 per cent in 1988 to 16 per cent in 1993 (Fundação SEADE, 1991).

Housing conditions

The housing situation is a visual reflection of what is happening in the rest of São Paulo society. Recent estimates refer to a housing deficit of more than one million units in a metropolitan area with 3.9 million homes. Ten thousand people live on the streets. In 1992, two-thirds of all homes fell into some category of low-quality shelter (favela houses built of flimsy materials, households living in overcrowded conditions, etc.). In 1991, 28 per cent of homes lacked a connection to the water system, and 50 per cent were not linked to the sewerage system (figure 10.2).

Figure 10.2 Municipality of São Paulo: Drainage network and social segregation, 1987 (Source: PMSP, 1990)

Around 70 per cent of all homes have been built through self-help methods and the proportion rises to 90 per cent in some peripheral municipalities (Santos, 1990: 43). A significant number of these homes offer their inhabitants very poor shelter. The proliferation of favelas is a comparatively new phenomenon in São Paulo: in 1973, there were only 73,000 favelados, today there are 1.1 million. In 1991, 11.3 percent of the population lived in this form of housing, compared to only 1.1 per cent in 1973 (Veras and Taschner, 1992). There are now 1,600 favelas in the city, the largest, Héliopolis, accommodating some 50,000 people.

The pressure on some people to build their own home has led to a considerable shift in the tenure structure of the city. Whereas 41 per cent of families rented homes in 1972, the figure in 1990 was only 28 per cent. Nevertheless, the cortiços still represent a principal form of shelter available to the poor. Even if the proportion of families living in rental accommodation is in decline, the absolute numbers of tenants has been increasing rapidly, from 125,000 people in 1975 to 500,000 in 1982 and three million today. Many of the 88,000 cortiços in existence in 1987 were in a very bad state of repair (Pinheiro, 1992). In a survey in the municipality of São Paulo in 1986, only 19 per cent of homes had their own kitchen and fewer than 6 per cent their own tap. In four-fifths of the cortiços surveyed, an average of 2.6 people lived in every room, the rooms varying in size from 8 to 15 square metres.

The growth of rental accommodation in the central areas is due to the deteriorating employment situation and the growing importance of casual forms of work. Since the central areas contain the best locations for casual work and the real cost of transportation has been rising rapidly, many families have been forced into this kind of accommodation.


Transportation is another serious problem in São Paulo. Its quality is poor, its services are not expanding sufficiently rapidly, and fares are rising faster than the incomes of the poor. One consequence is that the number of journeys per person has been diminishing over time. In 1987, every inhabitant made 1.15 journeys per day compared to 1.53 ten years earlier. The change has affected passengers whatever their income. Using education as an income indicator, the average daily journeys made by those with university education fell from 3.26 in 1977 to 2.81 in 1987; for those with primary education the average fell from 0.86 to 0.58. The greater percentage fall in average journeys for the latter group is symptomatic of the deterioration in public transport facilities. Indeed, the numbers of journeys on public transport diminished slightly between 1987 and 1991 despite the rise in the metropolitan region's total population. In the municipality of São

Paulo, the number of bus journeys fell by 4 per cent between 1992 and 1993, the number of buses in operation by 12 per cent.

Various efforts have been made in recent years to improve the service and the current municipal administration is planning to privatize public transport services in the next two years. The municipality will remain in charge of overall coordination and technological development.


The quality of health care in the city is also deteriorating. Although the number of doctors has been increasing, the urban population has been growing faster. This does not just represent a failure to keep up with population increase, for the numbers of hospital beds and of hospital ancillary staff fell absolutely between 1977 and 1987 (Santos, 1992: 33). Hospital-bed occupancy rates have fallen to only 73 per cent, and many hospitals have been closing wards. No doubt the occupancy problem is accentuated by the distribution of hospital facilities: two-thirds of all hospitals are located in the central areas and 40 of the 54 public hospitals are found in middle-class neighbourhoods (Fundação SEADE, 1993).


The educational system is also in dire straits. In the lower grades, the number of students is growing so quickly that the system cannot cope. Matriculation into primary schools rose annually by 3.5 per cent in eleven years after 1980; a total of 3.1 million children registered in 1991 (Fundação SEADE, 1993). At the primary level, the number of private pupils is expanding fast, although at present that is not true of secondary education. The problems of secondary education are perhaps best reflected in the fact that 11 per cent of 17-yearolds are neither in work nor in education.


Water pollution is getting worse despite official efforts to protect the city's water sources. Recent legislation, intended to limit urban growth in the areas near the reservoirs, has failed (figure 10.3). Indeed, a significant share of urban expansion has occurred precisely in those areas, invasion settlements and illegal subdivisions having occupied large areas of protected land. Rising levels of pollution in the reservoirs have posed major problems for the Environmental Technology and Sanitation Company (CETESB).

Figure 10.3 Metropolitan São Paulo: Land use and major sub-centres, 1993 (Source: EMPLASA, 1993)

At least, some success has been achieved against the major air polluters, CETESB having convinced the 162 major polluters (responsible for 96 per cent of particulate emissions) to follow their recommended procedures. Even so, recommended air pollution levels are being exceeded in terms of suspended dust and smoke levels. Prescribed maxima for levels of ozone, carbon monoxide, and sulphur dioxide are also regularly exceeded and CETESB has been forced to introduce special measures during the winter, when the effects of temperature inversions are at their worst. The city's 4.5 million cars are a particular problem with respect to air pollution, especially in the central areas.


There has been a sharp and worrying rise in the crime rate. Recorded crimes against the person increased annually by 7 per cent over a twenty-year period, from 41,000 in 1973 to 162,000 in 1991. Property crime rose even more quickly, with an annual increase of 9.3 per cent during the same period (Pastore et al., 1991: 69; (Fundação SEADE/ Estado de São Paulo, 1992).2 Crime has been increasing in all parts of the city but especially in the central area. The likely causes are rising unemployment, increasing levels of drug use, deterioration in family values, and the rising numbers of children living in the street (often themselves the victims of crimes of violence). The perpetrators of crime are certainly not confined to the lower ranks of society: during the last three years between 5 and 10 per cent of recorded criminals came from the middle class. The police themselves are also committing more crimes: deaths at the hands of the police rose from 165 in 1983 to 1,350 in 1992 (Pinheiro, 1991: 95; Folha de São Paulo, 31 May 1993).

Public administration

As the problems of the metropolis are increasing, the local authorities are facing greater problems in confronting them. In 1974, the federal government created new administrative agencies for the country's nine metropolitan areas. It was hoped that these new agencies would be much less bureaucratic than the existing local government structures. The new agency for São Paulo, EMPLASA (the Metropolitan Agency for Greater São Paulo), was effective but it took over responsibility only for transportation and for management of the region's water resources. This left the municipalities to address all the other serious problems, with only limited help from the state and federal governments.

The 39 municipalities which make up the metropolitan region receive half of their revenues from higher levels of government (in 1990, 5.6 per cent from the federal government and 45.1 per cent from the state government) and generate the rest themselves. The municipal financial situation has deteriorated recently, owing to the economic recession and the increasing numbers of under- and unemployed workers. The federal government transfers part of its income tax and industrial value-added taxes into a Participation Fund. This fund, which accounts for 17 per cent of federal revenues, is divided between the municipalities on a per capita basis. The smaller municipalities gain most of their revenues from this source; larger authorities are better able to supplement this source of income from their own tax base. The State of São Paulo transfers funds to the municipalities from its taxes on commerce, services, and vehicle ownership. The municipalities' own revenues are derived from taxes on land and property, property transactions, sales of petroleum and other lubricants, and professional services. In 1990, the tax on services (ISS) generated 60 per cent of the municipal tax revenue in the metropolitan region; the taxes on land and property a further 19 per cent (EMPLASA, 1992). The other significant source of revenue in the past has been foreign loans, a fact reflected in the current cost of interest payments, which absorbed 6 per cent of the budget in 1990 (EMPLASA, 1992).

Municipal expenditures have been growing fast in the area of public works and falling in the social sectors. This has been particularly marked since the beginning of abertura, when political attention focused on transport subsidies and on the maintainance and renovation of roads. Whereas the budget for education, health, and housing fell by US$600 million between 1993 and 1994, the cost of building a tunnel under the River Pinheiros raised the road budget by 185 millions. The latter project is likely to cost the municipality of São Paulo US$3 billion over the next few years and a major question must be asked about the social benefits to be derived from this scheme.

The future

Between 1970 and 1980, 4.6 million people were added to the metropolitan population, 2.3 million of them as migrants. During the same period, the population of Rio de Janeiro increased by "only" 2.1 million people and the number of migrants into the whole of Amazonia totalled only 2 million. Seventeen per cent of all migrants in the country - 40 per cent of all the migrants who moved to the nine metropolitan regions - moved to São Paulo.

Fortunately, the pace of growth slowed during the 1980s and the forecast of 19 million inhabitants by 1990 was well wide of the mark. A halving of the annual growth rate of some 250,000 people per annum meant that the city had only 15.2 million inhabitants in 1991. Annual growth in the 1980s had averaged 1.9 per cent compared to 4.5 per cent in the 1970s.

One reason for this slowing in growth is the dramatic fall in fertility in the country. In the early 1950s, the average woman bore 6.2 children in her lifetime, in the early 1980s only 3.5. Brazil's population growth rate fell from 3.7 per cent per annum in the 1970s to 1.9 per cent during the 1980s. A further reason for the marked slowing in São Paulo's population increase is the changing pattern of migration. During the 1980s, there was an important reversal in the long-term trend, the metropolitan area suffering a net loss in the numbers of people moving into and out of the city (Perillo and Aranha, 1992). In the 1970s, the metropolitan area gained 2.3 million people through migration; between 1980 and 1991, it lost 430,000.3 By contrast, net migration to the rest of the state increased by 838,000 in the 1980s compared to 751,000 in the 1970s. People have turned their backs on the city of São Paulo.

The change can be explained by the decentralization of manufacturing and service activity to areas beyond the metropolitan region. This trend is very worrying at a time of increasing social needs, because it promises to cut the tax revenues of the city authorities. Local government can no longer rely on the federal budget, which is likely to decline in real terms, nor on foreign loans. The difficulties of providing infrastructure in the 1970s were addressed with the help of loans from the World Bank and the Inter-American Bank, but this option is much less open to the authorities today. A critical issue today, therefore, is how to provide infrastructure and services to satisfy the ever-increasing demands of both industrial and residential users in an environment of declining resources. The prospects for social spending do not look good.

Even if the authorities are helped by the slower rate of demographic growth, the city's population will continue to grow. It will take an enormous effort to address the needs of these additional people as well as those of the people who were neglected during the lost decade of the 1980s. Such an effort will be helped if the economy begins to grow once again, but, even if it does, one major policy change is vital: more tax resources must be shifted from the State of São Paulo and from the nation to the municipal authorities. Without larger fiscal transfers the prospects for the city look bleak.


1. Pôrto Alegre has 26 per cent of its labour force in manufacturing and Curitiba 18 per cent; in other major Brazilian cities the percentage is rather less.

2. Crime rates are under-recorded because not every victim reports a crime, nor do the police bother recording every crime that is reported to them.

3. Not surprisingly, there was a large net outflow of people from the municipality of São Paulo.

Whereas it gained 1.14 million people in the 1970s, it lost 900,000 during the 1980s.


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