Economy of Porto Alegre

Historically, the industrialisation of Brazil was slow and it was not until the 1930s that the south of Brazil became industrialised. Porto Alegre acts as the centre for the industrial sector of the South of Brazil and particularly for Rio Grande do Sul.[6] The city is located on the bank of the Rio Guaiba, through the history of the city, its location at the junction of 5 rivers has been important in establishing it as a “chief industrial and commercial centre of Brazil.”[2]

Population of Porto Alegre (Figure 1)

Location of Porto Alegre (figure 2)

The population of Porto Alegre is 1,483,771.[7] As a percentage of the total population of Brazil (210, 147, 125[8]), the people of Porto Alegre make up approximately 0.67% of the population. (As shown in figure 1).

Porto Alegre is the capital city of the southernmost state in Brazil (Rio Grande do Sol). Its location can be seen in figure 2. It is situated next to the freshwater lagoon named the Lagoa dos Patos, this lagoon is the meeting of 5 rivers.[9]

The GDP of Porto Alegre (figure 3)

The GDP per capita of Porto Alegre is 49,740,90 R$.[7] As shown in the graph below (figure 2), the GDP per capita of Porto Alegre has been steadily increasing since 2010 showing a 65.8% increase. (Calculated from graph).

The Brazilian Real (figure 4)

The currency used throughout Brazil (hence in Porto Alegre) is the Brazilian Real (BRL).[10]

Subunit:

1/100 centavos (i.e. it is 100 centavos per 1 Brazilian Real).

Symbol:

The symbol used for denoting a Brazilian Real is R$ [10]

Shown in figure 4 is the Brazilian Real.

The balance of trade of Rio Grande do Sul (of which Porto Alegre is the top exporter) between 2010-2017 was positive (i.e. the state exported more goods than they imported). In 2017 the states balance was $7.5 billion USD.[5] The state accounts for roughly 10% of Brazil’s total exports; Porto Alegre contributing to at least 20% of this figure.[11] Porto Alegre’s major exports include plastics, oil, grains, fruits, meat, vehicle parts, soybeans, leather, and rice.[7] Because of Porto Alegre’s location; the cities port has always been a trading and logistics hub as it is a junction for 5 major rivers.

The unemployment rate of Porto Alegre (2019) is 9.5%,[12] which is 3.04% lower than the employment rate of Brazil.[13] It can be seen in the graph below that since 2002 the unemployment rate of Porto Alegre has been generally decreasing until 2014 when they began to rise again.[14] It can also be noted that no other capital city between 2014-18 decreased their unemployment rates.[14]

The average salary in Porto Alegre is between 130, 000$R and 145, 000$R yearly[15] ($22825.04 (USD) to $25458.69 (USD)). Individuals working in the public sector earn on average 6% more than those working in the private sector. [15] The average monthly salary has been notably increasing since 2016, averaging a 3% increase up to 2020.[15] The income in Porto Alegre compared to that of Brazil shows that on average the salary is 5% higher in Porto Alegre than Brazil.[16]

The average price per square metre in Porto Alegre is 6, 390R$[17] compared to the average housing cost in Brazil being 7,431.25 R$ per square metre.[18] The price per square metre is on average 15.1% lower in Porto Alegre than the average price in Brazil.

The economic sectors of Porto Alegre (figure 5)

The main sectors of the Economy of Porto Alegre are services, industry and agriculture. [19] These three sectors are essential to the economy of the city. These sectors contributions to the economy are as follows:

Participatory Budgeting is a democratic decision making process allowing citizens to allocate the public budget.[4] This concept originated in Porto Alegre, hence has historical significance to the city.[4] Participatory budgeting was established in 1989 under the leadership of Olivio Dutra,[44] this concept is built on 3 principles that are as follows:

1. “All citizens are entitled to participate
2. Participation is governed by a combination of direct and representative democracy rules and takes place through regularly functioning institutions whose internal rules are decided upon by the participants;
3. Investment resources are allocated according to an objective method based on a combination of ‘general criteria’ and ‘technical criteria’"[45]

These principles are reflective of the democratic nature of this system. 2,700 governments have adopted the practice since the origination of the concept in Porto Alegre.[4]

The benefits of Participatory Budgeting have been seen in many areas where this system is put in place however, the benefits in the first 10 years of its implementation in Porto Alegre show strong results. Data from a case study by the World Bank[46] shows the following results:

• An increase in public housing units; originally having only 1,700 new residents in 1986 à after the implementation of Participatory budgeting housing an additional 27,000 in 1989.
• Before Participatory Budgeting, only 75% of the households had sewer and water connections, increasing to 98% of total households by 1997.
• The number of has schools in the city by 1986 increased by 300%.
• The budget allocation for health and education increased from 13% to just shy of 40% in the first 10 years of the implementation of participatory budgeting.