São Paulo was originally inhabited by the indigenous Tupi peoples (Tupi–Guarani etc) before a series of coastal sugar plantations were established by the Portuguese in the 16th century. In fact, the town of São Vicente – located an hour’s drive from São Paulo – was the first permanent Portuguese settlement in the Americas. However, unlike northeast Brazil, mountains limited growing areas and, while it seems hard to believe now, the region remained a colonial backwater well into the 18th century.

Two groups dominated early Paulista life: Jesuits, who crossed the coastal range to found the future city of São Paulo in 1554, and the bandeirantes – groups of pioneers who conducted raids into the interior, enslaving indigenous peoples to work the coastal plantations – who followed them. The interior was so remote that even people of European descent spoke not Portuguese but a simplified form of the indigenous Tupi-Guarani language.

When Africans began to replace indigenous peoples on the slave plantations in the late 17th century, the bandeirantes tried their fortune hunting for gold, eventually discovering rich veins in neighboring Minas Gerais. The town of São Paulo profited as an important market for bandeirantes to stock up on supplies for their expeditions. The land around it also proved relatively good for growing sugarcane.

By the early 19th century, however, sugar growers discovered that their soil was ideal for an even more profitable crop: coffee. By the 1850s vast stretches of the state were given over to coffee plantations. A rail connection over the coastal range began carrying hugely profitable quantities of the bean to the port at Santos, and then on to world markets. When slavery was abolished in 1888, growers encouraged mass immigration of Europeans, particularly Italians, to work the plantations. The next great wave of immigrants came from Japan, starting in around 1910 and peaking in the 1930s.

Crashing coffee prices in the early 20th century convinced investors that they needed to spread their bets, and by the 1950s São Paulo had transformed itself into the industrial engine that drove the national economy. Cars had replaced coffee as São Paulo’s new cash crop. At the same time, the vast automotive plants that sprung up in São Bernardo do Campo, south of São Paulo city, became a hotbed of leftist union activity and proving grounds for future president Luíz Inácio (Lula) da Silva.

In fact, the trade unionists were part of a long tradition of liberalism and dissent in the state, from the independence and abolition movements of the 19th century through to opposition to the military junta that, with support from the US, ruled the country from the 1960s to the 1980s.

While immigration slowed dramatically by the 1980s, millions of Brazilians continued to stream into São Paulo, particularly from the Northeast. As the capital failed to cope with its growth, and crime and congestion spiraled out of control, many entrepreneurs began to migrate to the more stable cities of the interior. Today, Campinas and Ribeirão Preto, once small towns, sit amid one of the richest regions in Latin America.

The state’s dominance remains unchallenged within Brazil, representing a whopping 34% of the country’s total GDP. The mega growth of China and India has raised alarm bells among Brazilian industrialists, though plenty of business people are capitalizing on these new markets to sell raw materials. The recent discovery of huge oil reserves off the Brazilian coast is also sure to put even more fire into a strong – and increasingly stable and diversified – economy. However, most agree that São Paulo, like the rest of Brazil, must still address the gaping divide between the haves and have-nots to achieve lasting stability.