Diana Valentina Molina Murillo_201816363

Sebastián Franco Torres_201821099

Daniel Felipe López Rubiano _201816742

Sao Paulo: two sides of the same coin

Daniel Lopez Rubiano
Diana Molina Murillo
Sebastian Franco Torres

The city of Sao Paulo has an area of 1521 kmˆ2, is located in Brazil and is considered the
largest in the southern hemisphere, it stands out for its gastronomy, culture, entertainment,
urban planning and economy, which characterizes it as the cosmopolitan center from the
country. In addition, it is important to highlight that it is classified as the fourth city with
the largest population in the world, thanks to the fact that it has approximately 21.6 million
inhabitants according to the 2020 data estimated by the United Nations.

On the other hand, the history of Sao Paulo is curious from its beginning, since this city
was founded by Jesuits who were looking for healthy lands and new towns to evangelize. In
their search, Jose de Anchieta and Manoel de Paiva (main representatives) found the perfect
place to cultivate and defend themselves from possible indigenous attacks, this place was
located on a high and flat hill between the Anhangabaú and Tamanduate rivers. After its
discovery, they founded on January 25, 1554, a school around which the first houses that
gave way to the origin of Sao Paulo were built, with the passage of time Sau Paulo became
a town and in 1711 it was declared a city.

Since Sao Paulo was founded it has not stopped its development and growth, this led it to
have the importance of today at the national and global level. Without a doubt, Sao Paulo is
a city that offers various opportunities to visitors, which in turn helps to boost the economy,
the fact that this city is so recognized and important can be attributed to a correct
administration since its inception, which it has been maintained and improved over time.

Regarding the above, Sao Paulo is not only known for being the best city to do business in
Latin America, it also stands out for its incredible infrastructure and urbanism, it is
important to highlight the church of Sé, founded in 1591, but today it has with
approximately 260 movie theaters, 79 shopping malls, 90 libraries, 75 parks among other
perfect places for tourists. However, Sao Paulo has another attraction that makes its
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

development and growth continue to advance, cultural events such as "the Art Biennale"
and sports events such as Formula 1 attract even more international tourism.

For this country, the economic activity of Sao Paulo is particularly relevant for the national
product. This metropolis is considered The Powerhouse of Brazil, its financial and business
capital (Bentley, 2016). According to Bógus & Pasternak (2019), for 2015, the economic
activities realized in the Sao Paulo Metropolitan Area (SPMA) constituted 17,63% of
Brazil's GDP, the highest participation among the cities of this country.

In the last three decades, the industrial composition of SPMA has undergone a process of
transformation: the production nowadays focuses on new factors, different from those that
used to be the most relevant. In other words, the economy of SMPA went through a
structural change, understood this as a change in the proportion of income obtained by each
economic sector. The case of Sao Paulo is similar to other economies in the world, in which
the sector that represents the highest production volume (or profitability) ceased to be the
secondary sector (confection of final goods) and became the tertiary sector (or services).

This success can be appreciated on the figures of the relative value of each economic sector
on SMPA GDP. Between 1985 and 1995, the participation of the tertiary sector in Sao
Paulo increased from 28,8% to 46,2%. At the same time, the relevance of the secondary
reduced from 69,1% to 49,1% (Marcuse & van Kempen, 2002). Also, according to Bógus
& Pasternak (2019), by 2010, the tertiary sector accounted for 60.8% of SMPA's GDP. In
contrast, the secondary only contributed 46.8%.

As it was told, the tertiary sector is composed of the companies dedicated to offering
services. Currently, in SMPA, the most important industries are those whose offer of
services requires high-skill labor. In this sense, the leading activities are education, health,
and financial industry services (Biderman & Lopes, 2015). Even more, the financial sector
of SMPA has relevance in the financial system of Brazil. In the words of Bógus &
Pasternak (2019), the financial sector “it the grouping of capital management activities,
which involve material and symbolic tasks, whose epicenter, in Brazil, is in the
municipality of São Paulo” (p. 156).
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

Because of the process of structural change in the SPMA economy, the labor market in this
Brazilian city also suffered changes in its behavior. Marcuse & van Kempen (2002) studied
the SPMA to determine what factors help to configure the spatial segregation of the
population in this space. Their research concluded that, during the structural change, the
effects on the labor market of SPMA were an increase in the number of workers employed
in informal jobs; a decrease in the average wages of the industries of the secondary sector;
and a rise in the unemployment level of the city. Ultimately, these labor market distortions
further exacerbated inequality of opportunities in the SMPA, while the possibilities of
social mobility in the city decreased. Thus, the structural change reduced the income levels
of many inhabitants in the SMPA, and how they can improve them. Consequently,
structural change exacerbated one of the biggest social problems facing the city of Sao
Paulo: wage inequality.

More clearly, the distribution of the economy's product in SPMA is quite unequal. In the
words of Bentley (2016), “This is a city with one of the highest levels of inequality in the
world” (p. 1). To illustrate, income inequality can be measured with the Gini index, a
variable that takes values between 0 and 1, where 0 is perfect equality, and 1 is the opposite
extreme, perfect inequality. In the case of the city of Sao Paulo, the Gini index was found at
0.56 for 1991, then for 2010, this figure increased to a value of 0.62 (ask my mother). In
summary, the economic development of the SPMA brought costs and benefits for the
society of this city. On the one hand, service companies saw their profitability increase, as
the metropolis of Sao Paulo generates incentives to promote the growth of the tertiary
sector. On the other, the inhabitants whose livelihoods and job opportunities arose in the
manufacturing industry experienced, little by little, an exponential increase in wage
inequality.

Urban Planning:

To understand these phenomena of segregation and inequality, we have to examine the

history of Sao Paulo a little more deeply. Three centuries after its foundation, Sao Pablo
began a very accelerated economic growth, hand in hand with coffee and its export, whose
main beneficiaries were a few, generating a hierarchical society separated between
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

manufacturing workers and powerful landowners. When the city began to diversify to face
its new functions, at the end of the seventeenth century, there was a factor that began with
segregation and it was precisely the location of the urbanizations of these two groups, as
(Marcuse, 2002) says: “The city was divided in two major areas, and the Tamanduatei river
acted as the divider between the two”. At this point Avenida Paulista was built, an avenue
with a complete infrastructure that today, after a change in the organization of the city to
face globalization, is one of the most luxurious avenues since it has become the main
financial center of Latin America. After the first urbanization, the coffee economy
continued its growth and the population doubled in 10 years by 1934. However, the
installation of public services was not for everyone. Initially, the installation of electricity,
water and gas was done only for the Jardin districts, which were planned and built by the
upper classes and by a British company "Conpanhia City". This caused the price of the
central parts of the city to increase and the immigration of foreigners, attracted by the
growth of the city, who had nowhere to stay, began to build the famous "favelas" of Sao
Paulo, isolated places on the outskirts of the city, the majority with great infrastructure
deficiencies even today.

The 40s are important for city planning, The creation of the Department of Urbanism in São
Paulo happens in 1947, in addition, an organization of intellectual architects and humanists
called SAGMACS carried out a study due to the agglomeration around the center of the
city. The 40s are important for city planning, the creation of the Department of Urbanism in
São Paulo happens in 1947, in addition, an organization of intellectual architects and
humanists called SAGMACS carried out a study due to the agglomeration around the
center of the city. As (Silva, 2016) affirms: “In the research commissioned by the São
Paulo city administration, SAGMACS studied the São Paulo agglomeration. The region
was divided into 360 units of analysis, defined as an elementary echelon of collective life”
and made a proposal to define new city centers: The hypothesis of the proposal was that the
tendency of the São Paulo agglomeration was to structure itself in a polynuclear manner
into secondary centers, in order to give different regions a relative autonomy. The problem
was that these centers were built with a high level of infrastructure that displaced the people
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

who lived there, this made areas have a great value, while others remained in their marginal
condition.

Subsequently, the growth of the city and its neighboring cities made it necessary to create a
metropolitan area, which began to be planned since 1970, including, among the most
important districts: Campinas, Baixada Santista, the micro-region of Sorocaba, the micro-
region of Jundiaí and the micro-region of São José dos Campos. That in total, they form a
megalopolis of more than 33M inhabitants. Later, around the 90s, Sao Paulo underwent
drastic changes to secure its place in the globalized economy: many of the manufacturing
centers were demolished and replaced with financial centers, which contributed much more
to the contrast between the luxurious hotels, restaurants and cultural centers of the multiple
urban centers of the city, with the marginal favelas around the city. In 1993, 19.3% of the
population lived in favelas, which by then represented 2M people.

Economy:
Sao Paulo is the city with the greatest number of inhabitants and the largest metropolitan
area in Brazil. For this country, the economic activity of Sao Paulo is particularly relevant
for the national product. This metropolis is considered The Powerhouse of Brazil, its
financial and business capital (Bentley, 2016). According to Bógus & Pasternak (2019), for
2015, the economic activities realized in the Sao Paulo Metropolitan Area (SPMA)
constituted 17,63% of Brazil's GDP, the highest participation among the cities of this
country.

In the last three decades, the industrial composition of SPMA has undergone a process of
transformation: the production nowadays focuses on new factors, different from those that
used to be the most relevant. In other words, the economy of SMPA went through a
structural change, understood this as a change in the proportion of income obtained by each
economic sector. The case of Sao Paulo is similar to other economies in the world, in which
the sector that represents the highest production volume (or profitability) ceased to be the
secondary sector (confection of final goods) and became the tertiary sector (or services).

This success can be appreciated on the figures of the relative value of each economic sector
on SMPA GDP. Between 1985 and 1995, the participation of the tertiary sector in Sao
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

Paulo increased from 28,8% to 46,2%. At the same time, the relevance of the secondary
reduced from 69,1% to 49,1% (Marcuse & van Kempen, 2002). Also, according to Bógus
& Pasternak (2019), by 2010, the tertiary sector accounted for 60.8% of SMPA's GDP. In
contrast, the secondary only contributed 46.8%.

As it was told, the tertiary sector is composed of the companies dedicated to offering
services. Currently, in SMPA, the most important industries are those whose offer of
services requires high-skill labor. In this sense, the leading activities are education, health,
and financial industry services (Biderman & Lopes, 2015). Even more, the financial sector
of SMPA has relevance in the financial system of Brazil. In the words of Bógus &
Pasternak (2019), the financial sector “it the grouping of capital management activities,
which involve material and symbolic tasks, whose epicenter, in Brazil, is in the
municipality of São Paulo” (p. 156).

Because of the process of structural change in the SPMA economy, the labor market in this
Brazilian city also suffered changes in its behavior. Marcuse & van Kempen (2002) studied
the SPMA to determine what factors help to configure the spatial segregation of the
population in this space. Their research concluded that, during the structural change, the
effects on the labor market of SPMA were an increase in the number of workers employed
in informal jobs; a decrease in the average wages of the industries of the secondary sector;
and a rise in the unemployment level of the city. Ultimately, these labor market distortions
further exacerbated inequality of opportunities in the SMPA, while the possibilities of
social mobility in the city decreased. Thus, the structural change reduced the income levels
of many inhabitants in the SMPA, and how they can improve them. Consequently,
structural change exacerbated one of the biggest social problems facing the city of Sao
Paulo: wage inequality.

More clearly, the distribution of the economy's product in SPMA is quite unequal. In the
words of Bentley (2016), “This is a city with one of the highest levels of inequality in the
world” (p. 1). To illustrate, income inequality can be measured with the Gini index, a
variable that takes values between 0 and 1, where 0 is perfect equality, and 1 is the opposite
extreme, perfect inequality. In the case of the city of Sao Paulo, the Gini index was found at
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

0.56 for 1991, then for 2010, this figure increased to a value of 0.62 (ask my mother). In
summary, the economic development of the SPMA brought costs and benefits for the
society of this city. On the one hand, service companies saw their profitability increase, as
the metropolis of Sao Paulo generates incentives to promote the growth of the tertiary
sector. On the other, the inhabitants whose livelihoods and job opportunities arose in the
manufacturing industry experienced, little by little, an exponential increase in wage
inequality.

Reference

 Bentley, S. (2016). One city-two ways of seeing Sao Paulo, Brazil. Warringal

Publications. https://www.warringalpublications.com.au/

 Biderman, C., & Lopes, M. (2015). The geographic dynamics of industry

employment in Brazilian metropolitan areas: Lessons for Sao Paulo. Brazilian
Journal of Political Economy, 35(3), 429-509. Extracted from:
https://www.scielo.br/scielo.php?script=sci_arttext&pid=S0101-
31572015000300492&lng=en&tlng=en
 Bógus, L., & Pasternak, S. (2019). Social Map of the Metropolitan Region of Sao
Paulo: Spacial Inequalities. Andamios: Revista de Investigación Social, 16(39),
151-175. https://www.uacm.edu.mx/andamios
 Los 10 países más ricos del mundo... y los 10 más desiguales. (2018, 2 julio). BBC
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%C3%ADses%20m%C3%A1s%20desiguales%20del,son%20Sud%C3%A1frica
%2C%20Hait%C3%AD%20y%20Honduras.
 Marcuse, P., & van Kempen, R. (Eds.). (2002). Economic Restructuring and Urban
Segregation in Sao Paulo. In Of States and Cities: The partitioning of Urban Space
(pp. 143-169). Oxford University Press.
 Programa de las Naciones Unidas para el Desarrollo, Instituto de Investigación
Económica Aplicada, & Fundación João Pinheiro. (s. f.). Sao Paulo, SP. Atlas del
Diana Valentina Molina Murillo_201816363
Sebastián Franco Torres_201821099
Daniel Felipe López Rubiano _201816742

Desarrollo Urbano en Brasil. Recuperate 25 de septiembre de 2020, de

http://www.atlasbrasil.org.br/2013/es/perfil_m/sao-paulo_sp/
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