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This essay argues that understanding the economic structure and dynamics of favelas is crucial in shaping public policies that reduce poverty and generate higher levels of human-capability attainment for all Brazilians. There is at present no settled model of the favela economy, or even agreement among economists about how favelas fit into the broader urban economy. Nor has an agreed model of low-income or segregated minority communities in other countries been developed. Nor could this article set out an approach to the economy of the favela on which all observers and analysts would agree. Given this point of departure, this paper seeks to provoke debate and dialogue about how the economy of the favela should be seen, and about how favelas fit into the broader economic dynamics of the cities and regions in which they exist. The idea is not to settle debate, but to start it. Consequently, a variety of approaches to favelas – ways of “seeing” them – are set out here, without resolving which is most accurate or most useful. The different ways of “seeing” favelas illuminate the conflicting interests at work, interests that imagine different futures for the people and the land occupied by favelas today. In the absence of any debate about these views and the futures they imply, empowered economic and political interests will grind out futures for favelas and those who live there now without any consideration of the public interest and the rights of their residents.
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