Indonesia is among the developing countries that has vulnerability to disaster. One of disaster-prone in Indonesia is Western Sumatera Region. Base on recording record, there was three times of big earthquake and tsunami hit this kind of region. The last time was occurred in 2009 that hit virtually all the areas in this province together with the losses about Rp four. 8 billion or US $ 64 trillion. This condition leads to the disturbance of economic activities and the failures from business distraction.
Natural catastrophes that struck these areas automatically are noticed deterioration in the economic (Okuyama, 2013) and development field’s interval of several years following the occurrence earthquake. This is really because of the destruction in infrastructures and associated with majority of the victims jobless and out of place (Okuyama, 2003).
Many studies have been performed related to the economic effect of natural disaster. You will discover two kinds of study regarding it, the economic impact of natural catastrophe in the long run as well as the economic effect in the growing process. Okuyama (2015) argue that the long term, economic effect of disaster can be analyzed with econometric unit with the purpose to assess the damage a result of the share that impact to the long run growth path. While the kind run effect of economic of disaster applying I-O version, social accounting matrix, or perhaps computable basic equilibrium (CGE) model to analyze the structure changes in the financial that distinguish negative effects of injuries and positive impact of recovery and reconstruction activity.
Based on Okuyama (2015) over time effect of devastation happened in the main area that occurred the event. The injuries from the tragedy bring the restoration to the place and made the renewal program and technology. While Coffman (2011) believe in the long lasting, the economical condition of the disaster location has never totally recovered following disaster happen. It as a result of difficulties of the reconstruction region.
However for the short term Guimares (1992), and Strobl (2011) argue that the economic progress tend to fall at the disaster event, but the recovery of the disaster give influence to the economic growth. Lazzaroni (2014) also declared that at the time of the disaster happened there was significant effect to the direct expense that was social-economic factors in raising or lessening the injury effects of devastation. While in indirect expense, the impact of natural catastrophe on GDP, was an insignificant impact.
Based on that discussion, this analyze is done to identify whether the catastrophe in the West Sumatera Province give the changes in the monetary structure following the recovery activity that will recognize the impact with the damage plus the recovery activity to the economic structure.
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