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Several of the steep roads winding upward in Rocinha have now been paved, a sign of the neighbourhood’s steady rise. (Nadia Sussman for The Globe and Mail)
Several of the steep roads winding upward in Rocinha have now been paved, a sign of the neighbourhood’s steady rise. (Nadia Sussman for The Globe and Mail)

Rio on the rise, but what’s around the corner? Add to ...

With this story, Stephanie Nolen launches The Globe and Mail's bureau in Rio de Janeiro. Ms. Nolen takes up her new post as Rio looks ahead to the World Cup and the Olympics.

Six months ago, Cristian Gomes de Souza mostly thought about cake.

He and his wife had launched a cake-decorating business from their home, and he was using new ideas from the MBA classes he was taking at night to boost business. Sales were doubling, month by month.

Then his house started to crumble, a surprisingly unsurprising occurrence in the Brazilian neighbourhoods known as favelas, because of a hillside location and exposure to heavy rains. No one was hurt. And his cake pans were salvaged. But when Mr. de Souza started looking for a new place to rent, he discovered that his $400-a-month housing budget was no longer worth much in Rocinha. The community where he had lived all his life, once a one-word shorthand for Latin America’s worst problems, had stabilized enough under the government of Luiz Inácio da Silva to fuel a real-estate boom.

“For what we had been paying for a whole house – now I could get half of someone’s sitting room, with a divider down the middle and some other family on the other side,” he says.

Mr. de Souza’s situation points to both the pressures of a city in ascendance and a country in transformation, one being closely watched around the world for the lessons it may hold for other rising so-called BRIC nations.

Brazil is the world’s seventh-largest economy. With that economic clout, the country has laid claim to new political influence: Its leaders are keen to drive trade deals and international discussions, rivalling traditional powers or displacing them all together. New oil finds promise vast wealth. Better yet: The World Cup and the Olympics – hard-won prizes – still lie ahead. And social welfare programs have helped change this from a country renowned for its inequities to one that buzzes with possibility.

For all this, Brazil’s growth has slowed dramatically as global commodity prices cool. That puts the revolutionary progress of the “Lula” years at risk. And as Brazil’s fortunes rise and fall, it will affect the rest of the world.

Brazil’s economic fortunes certainly matter to Canada, because of the ever-closer trade and investment ties between the two countries. Last year, Brazil was the seventh-largest source of foreign direct investment in Canada. The money flows the other way too: More than 500 Canadian companies are active in Brazil, including heavyweights such as Brookfield Asset Management and the Canada Pension Plan Investment Board.

All of this plays out in some measure on the streets of Rocinha.

The largest favela in Brazil, Rocinha squeezes 175,000 people (about the population of St. John’s) up and over couple of very vertical square kilometres in the heart of Rio de Janerio. Until a very short time ago, it was run by vicious drug traffickers who strode the narrow streets carrying huge automatic weapons; it was all but devoid of social services, or any sign of the state, including piped water or garbage collection.

It was a colourful, impenetrable warehouse for generations of the urban poor who gazed down at Rio’s beaches and the boutiques, less than a mile and whole world away.

But a rare convergence of factors – that booming economy, anti-violence interventions, smart spending on social welfare programs and bold urban redevelopment aimed at prepping the city for soccer in 2014 and the Games in 2016 – have combined in the past few years to make transformation happen here.

Today, Rocinha has a large public health centre, a mammoth sports complex, a chic library-cum-theatre – and the only visible guns on the streets are carried by police on foot patrols. In addition to cake shops, there are shiny new bank branches, bulging appliance shops and orthodontic clinics.

And Cristian Gomes de Souza can chat about how things have changed from the front of his family’s shoe store, watching the shoppers and the school kids hiking up and down the steep street.

It’s not something they would have done a couple of years ago. For more than a quarter century, traficantes, drug dealers, had ruled this place. They made money selling drugs and weapons, but also by extortion, and by charging for services such as bootleg electricity, filling in some of the gaps created by a government that ignored the favelas for decades. They provided a perverse level of security – there were few burglaries, for example – but they were the target of occasional police raids, and waged frequent inter-gang turf wars, that made the streets wildly dangerous.

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