The Colonial Period ? the site of Brazil's capital was found by the Portuguese explorers when they entered the Guanabara Bay on January 1st, 1502. Since the bay was considered to be the mouth of a river, the city was named in honor of the day, Rio de Janeiro (River of January). The French traders attempted to settle down in the Guanabara Bay area in order to gain a strategic and economic foothold in Brazil.



They were evicted after a two year struggle (1565-1567) and Rio's site was moved up onto a hill which was later known as Castle Hill, in order to protect from further unwanted invasions. Rio rapidly developed thanks to huge exports of sugar that were grown on the surrounding plains. Later on, diamonds and gold were found in the Gerais mines and Rio further developed which lead to a rather significant European migration, resulting to the movement of the capital from Salvador to Rio in 1763.

Increasing sugar cane export competition came from other South American countries which lead to the Rio's economic crisis mainly because of the depleted mines. They revitalized the economy by exporting coffer and resettling the Portuguese royal families. During this period, new buildings were constructed and Rio suffered many infrastructure improvements.

Independent Rio ? during this period, Rio introduced the public transportation in the rudimentary form of horse drawn trolleys. Thanks to this, Rio de Janeiro further expanded into Botafogo and Tijuca. They later on introduced the steamboat service from Rio to Niteroi. Rio wasn't only the political center of Brazil but also the economical and cultural one too. Most of the newspapers, artists, writers were in Rio and so was the busiest port in all Brazil. The railroad infrastructure was greatly improved during this period.

Rio as the capital of the Republic of Brazil ? in the year 1889, Brazil became a republic and Rio de Janeiro remained the political capital of the country. During the next few years, the River of January began to look like a modern city mostly because the Central Zone was practically destroyed, allowing new buildings to be constructed. The north of Rio became a highly industrial area while the south was the location where the wealthy people lived. The street cars were electrified and represented the primary means of transportation in the city. After the end of World War II, they were replaced by automobiles.

The shift from an agricultural based economy to an industrial economy occurred creating a mixed blessing which caused a massive increase in the population of Rio. Although the city needed people to fill in the spots in the industries there still was a serious surplus of labor along with a worrying influx of unskilled and quite poor workers. This situation still occurs today and puts intense pressure on Rio's resources.

Rio today ? during the 1960s, the capital was moved from Rio to Brasilia in order to decentralize the overwhelming power available in Rio. All of the jobs associated with such political power were transferred to the interior of the country. This, along with a quite slowing economy and increased economic pressure from Sao Paulo, Rio de Janeiro is trying to remodel its role in the complex Brazilian economy.