What Rio’s failure and São Paolo’s success says about the importance of good governance
Rio de Janeiro has arguably one of the best settings in the world. A climate and scenic beauty that others would die for, add to that a long, rich history as imperial and national capital in the great nation of Brazil and it seems strange that a landlocked city in the mountains to the south of it is the country’s economic center and one of the world’s biggest metropolitan areas.
While Rio is the marvelous city, São Paolo is the city of drizzle, a vast “bland labyrinth” populated by castles of fucking sidewalk, to paraphrase Philaphilia. How did drizzle beat beaches? While people move to big cities because of higher paying jobs, more jobs (and thus more job security) as well as better amenities such as education, health care, infrastructure, entertainment and culture, these benefits can be offset by congestion and other negative externalities in the way of crime and pollution. Like Klaus Desmet and Esteban Rossi-Hansberg stated in their article “Are the world’s megacities too big?”:
“How fast the benefits of efficiency and amenities erode with population size because of increasing congestion costs depends on the quality of governance, responsible for the provision of road infrastructure, sewage systems, clean water, and security.”
The rise of São Paolo on Rio’s behalf is of course a result of more than local cronyism in the latter, but the fact remains that Rio’s decades long slump, where the city managed to waste one of the best natural advantages on the planet (amenities so good that multinational corporations who needed to set up shop in São Paolo, due to the economic benefits of being there, advised against letting their employees even set foot in Rio, lest they would want to stay there forever, this according to The Economist), was largely thanks to poor urban governance that allowed crime to get out of hand, infrastructure to crumble and human capital to go to waste. And if poor urban governance could do this to Rio, just imagine what local mismanagement means for less geographically endowed cities.