The site of Rio de Janeiro was founded by Portuguese explorers as they entered Guanabara Bay on the first of January, 1502. Since the bay was considered the mouth of a river, the city was named in honor of the day, Rio de Janeiro, or River of January. French traders also settled in the Guanabara Bay area, in an attempt to gain an economic and strategic foothold in Brazil. After two years of battles (1565-67), the French were expelled and the site of Rio was moved up onto a hill, later known as Castle Hill, for protection form further invasions. Rio grew on the exporting of sugar cane, grown on the surrounding plains. Eventually gold and diamonds were found in the Mines Gerais area, causing a economic shift to occur and Rio to reap the benefits. Many Europeans moved here after this discovery and in 1763 the capital was moved from Salvador to Rio, further increasing its prominence.
With increased competition in the sugar cane market from other South American countries and the resource depleted mines not producing what they had, Rio de Janeiro fell into an economic crisis. At the turn of the 19th century, Rio's exports were less than half of what they had been forty years previous. This began to turn around with the exporting of coffee and the resettling of the Portuguese royal family in Rio. Their thirteen year stay in Rio catapulted it into new prominence. New buildings and many infrastructure improvements had taken place during this period. After the departure of the royal family, Brazil became an independent nation.
During the period, Rio adopted public transportation in the form of horse drawn trolleys. These allowed for expansion further away from the city and into Botafogo to the south and Sao Cristovao and Tijuca the north and west. Steamboat service was introduced between Rio and Niteroi to the east. Rio was not only the political center of Brazil, being the capital, but also the economic and cultural center too. It was home to most newspapers, leading artists and writers and was the busiest port in Brazil. The railroad was expanding into the hinterland to transfer more goods through Rio.
In 1889, Brazil became a republic and Rio remained the political capital. In the following years, Rio began to take the shape of a modern city. The Central Zone was destroyed to make way for newer buildings and widened avenues. Land reclamation was essential to the rebuilding of the Central Business District. Hills were being destroyed and used as infill to develop swampy land. The separation of the three zones were becoming more defined. The north became highly industrial and working class, while the wealthy moved south. The street cars were electrified and were the most prominent form of transportation.
After World War II, the city began to assume the form of a modern city. The street cars were replaced by automobiles and skyscrapers began to define the core. It was felt that for Rio to compete in the world market, it must look the part. Freeways were completed and so was a seven mile bridge between Rio and Niteroi. The shift from an agricultural based economy to an industrial economy occurred creating a mixed blessing. This caused a massive increase in the population of Rio. Though more people were needed to fill the spots in the industries, there was and is a surplus of labor and the influx of poor, unskilled laborers continued. This put intense pressure on the resources of Rio and continues even today. The poor are forced into favelas along the steep hillsides or out around the periphery of the city.
In the 1960's, the capital was moved from Rio to Brasilia, in an effort to decentralize the power found in Rio. All the jobs associated with such political power transfered to the interior of the country. This, along with a slowing economy and increased economic pressure from Sao Paulo, Rio is trying to redefine its role in the Brazilian economy.
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