Brazil is quite a poor country, and in Rio it's easy to get into trouble if you don't keep aware of your surroundings. We had few problems ourselves and even took a tour of a local Favela. Favela's are basically illegal neighbourhoods with no authorized electricity, plumbing, or phones, yet a majority of the population lives.
While the city was younger with fewer people, the government decided to turn all of the mountain sides into official parks, so that no one could build there. The mountains were to be used for everyone's enjoyment, not just the rich. With little land nestled between the steep mountains I imagine the city quickly ran out of affordable places for middle and lower class people to live. So they started building up the mountain sides into the park land.
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