What Natural Disasters Occur in Indonesia?

Indonesia is one of the developing countries that has vulnerability to disaster. One of disaster-prone in Indonesia is West Sumatera Province. Base on recording history, there was three times of big earthquake and tsunami hit this region. The last time was happened in 2009 that hit almost all the areas in this province with the losses around Rp 4.8 billion or US $ 64 trillion. This condition leads to the disturbance of economic activities and the losses from business distraction.

Natural disasters that hit these areas automatically are seen deterioration in the economic (Okuyama, 2013) and development field’s interval of several years after the occurrence earthquake. This happens because of the destruction in infrastructures and make the majority of the victims jobless and displaced (Okuyama, 2003).

Many studies have been done related to the economic impact of natural disaster. There are two kinds of study about it, the economic impact of natural disaster in the long run and the economic impact in the short run. Okuyama (2015) argue that the long run, economic effect of disaster is analyzed with econometric model with the purpose to analyze the damage effect of the stock that influence to the long run growth path. While the sort run effect of economic of disaster using I-O model, social accounting matrix, or computable general equilibrium (CGE) model to analyze the structure changes in the economic that differentiate negative impact of damages and positive impact of recovery and reconstruction activity.

Based on Okuyama (2015) in the long run effect of disaster happened in the main area that occurred the event. The damages from the disaster bring the recovery to the area and made the renewal system and technology. While Coffman (2011) argue that in the long-term, the economic condition of the disaster region has never fully recovered after disaster happen. It because of the difficulties of the reconstruction area.

On the other hand for the short term Guimares (1992), and Strobl (2011) argue that the economic growth tend to decline at the disaster event, but the recovery of the disaster give influence to the economic growth. Lazzaroni (2014) also said that at the time of the disaster occurred there was significant effect to the direct cost that was social-economic factors in increasing or decreasing the harm effects of disaster. While in indirect cost, the impact of natural disaster on GDP, was an insignificant effect.

Based on that argument, this study is done to identify whether the disaster in the West Sumatera Province give the changes in the economic structure after the recovery activity that will identify the impact of the damage and the recovery activity to the economic structure.