The Impact of the 2006 Yogyakarta Earthquake on Local Economic Growth

This paper focuses on the local economic growth impacts of a specific natural disaster, viz. the Yogyakarta earthquake in 2006 employing data at the sub-national level in two provinces in Java, Indonesia. Specifically, we are concerned with the heterogeneity in the response of the various economic sectors to the earthquake, the spatial economic spill-overs from the affected regions to the non-affected districts, and the overall implications of the earthquake on the relative position of the local economies of the affected districts. We find that the earthquake did affect the growth of some sectors in the affected districts, but the shock did not change the (industrial) structure of the local economy. All sectors still had positive growth some years after the earthquake, which indicates the existence of a recovery processes following the shock.