Rio de Janeiro may well be the most beautiful big city on earth. The southern part of the city, spread around its famous palm-fringed beaches and with spectacular views of hills and sea, combines all the usual high-rise and high-tech artefacts of the modern metropolis with wide open spaces and lush green parks. Not surprisingly, the residents themselves (or "Cariocas" as they are called) speak of their own city with continual delight and appreciation.
 
Add to this extraordinary physical beauty a cultural milieu which is spontaneously exuberant and fun-loving, with uninhibited appreciation of not just music but all the sensual things of life, and it is difficult for the visitor not to be captivated. The city of Rio in particular captures the ethnic and cultural melange that makes Brazil so interesting, even though the larger urban conglomeration of Sao Paulo may have greater ethnic diversity, and Salvador in Bahia may show greater traces of the past two centuries of history.
 
Of course, the downside of this remarkably attractive place is also well known. Among developing countries, Brazil has a relatively high per capita income, but this is counterbalanced by the most unequal income distribution in the world. Urban poverty and squalor of a degree that would be familiar to Indians coexist with flamboyant first-world lifestyles among the elite. In Rio, this is dramatically illustrated by straightforward topography : the rich live, work and play in the delightful southern section by the sea; the poor fill the less interesting urban spaces with their congested high-rise blocks and carpet the hills with their favelas (slums).
 
The sharp inequality is reflected - inevitably - in high rates of crime and insecurity especially in the cities. The poorest of Brazil's people do not in fact live in the cities : they are the indigenous populations of the Northeast and in the Amazon region, who have been marginalised and further impoverished by the process of development so far. Even so, the plight of the urban poor and their living conditions are stark enough to make the contrast with the better off very prominent and visible, and also to generate resentment and criminality among the more deprived groups.
 
So it is that the city given to so much enjoyment and the celebration of life is also the city of violence and fear, where petty theft is so commonplace that it no longer merits comment, while more serious acts of violence are also treated as part of quotidian life. The attacks on groups of abandoned street children by self-styled private vigilante groups may have diminished somewhat recently, but the basic plight of such children persists, and some observers feel their numbers have increased. Meanwhile, as formal employment continues to fall in the wake of severe austerity measures imposed since early last year, the search for informal employment inevitably takes many forms, not all of which are entirely legal or socially desirable.
 
On the face of it, the Brazilian economy appears to have recovered quite impressively from the crisis of late 1998-early 1999, when private capital flight and speculation against the Real (the Brazilian currency created as part of President Cardoso's anti-inflationary plan of 1985) bled the country's official foreign exchange reserves and caused the government to go to the IMF for succour. The IMF imposed its usual, remarkably unchanging, set of conditions, and the stage was set for the usual pattern of recession, job loss and decline in the availability of public goods and services.
 
As always, this meant that the burden of adjustment was borne by the working people, while the elites who had gained from the earlier pattern of growth further improved their position. It is likely, therefore, that the latest round of recession and adjustment has further worsened income distribution from its already very unequal state. The current recovery, which is now is full swing, is similarly associated with substantial increases in private profits and little increase in employment.
 
The basis of the current recovery is the privatisation programme of the government, which has meant the sale of immensely lucrative state assets in petroleum, telecom, insurance and other activities, to private, typically foreign, buyers. This, along with other incentives to foreign capital, has encouraged more inflow of foreign savings to buy cheap assets and benefit from the potentially huge Brazilian market.