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Livelihood Recovery after Natural Disasters and the Role of Aid: The Case of the 2006 Yogyakarta Earthquake


  • Budy P. Resosudarmo
  • Catur Sugiyanto
  • Ari Kuncoro


The 27 May 2006 Yogyakarta earthquake caused the death of more than 5.7 thousand people, more than 60 thousand people were injured and hundreds of thousands lost their houses. Bantul district was the most severely affected by the earthquake. This paper is an attempt to understand the determinants of livelihood recovery after this natural disaster and, in particular, the role of aid in that recovery process. A panel firm level survey was conducted visiting around 500 mostly small and micro enterprises in Bantul district twice: 6 months and a year after the earthquake. This paper argues that (1) smaller enterprises are more resilient and so able to bounce back faster, (2) an industrial cluster system within a subdistrict does provide support needed by firms to recover, (3) the quality of village infrastructure could be important, (4) it is important for donors not to give too much assurance of financial support to enterprises, but rather just to distribute it when it is actually available. The faster it is distributed, the better the impact on enterprises affected by the earthquake, and (4) although over a longer period of time, the effectiveness of aid might well diminish, aid does improve a firm’s ability to survive.
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Suggested Citation

  • Budy P. Resosudarmo & Catur Sugiyanto & Ari Kuncoro, 2012. "Livelihood Recovery after Natural Disasters and the Role of Aid: The Case of the 2006 Yogyakarta Earthquake," Asian Economic Journal, East Asian Economic Association, vol. 26(3), pages 233-259, September.
  • Handle: RePEc:bla:asiaec:v:26:y:2012:i:3:p:233-259

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    References listed on IDEAS

    1. Prema-chandra Athukorala & Budy P. Resosudarmo, 2005. "The Indian Ocean Tsunami: Economic Impact, Disaster Management and Lessons," Departmental Working Papers 2005-05, The Australian National University, Arndt-Corden Department of Economics.
    2. Sato, Yuri, 2000. "How did the crisis affect small and medium-sized enterprises? -- from a field study of the metal-working industry in Java," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 38(4), pages 572-595, December.
    3. Hung-ju Chen & Hsiao-tang Hsu, 2005. "The Role Of Firm Size In Controlling Output Decline During The Asian Financial Crisis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 103-129, December.
    4. Dionisius Narjoko & Hal Hill, 2007. "Winners and Losers during a Deep Economic Crisis: Firm-level Evidence from Indonesian Manufacturing ," Asian Economic Journal, East Asian Economic Association, vol. 21(4), pages 343-368, December.
    5. Suvadee Rungsomboon, 2005. "Deterioration of Firm Balance Sheet and Investment Behavior: Evidence from Panel Data on Thai Firms ," Asian Economic Journal, East Asian Economic Association, vol. 19(3), pages 335-356, September.
    6. Robert Dekle & Cathy Karnchanasai & Pongsak Hoontrakul, 2005. "The Thai Currency Crisis: Financing Constraints, High Fixed Costs, and Corporate Governance," Asian Economic Papers, MIT Press, vol. 4(2), pages 60-87, Spring/Su.
    7. repec:tpr:asiaec:v:4:y:2005:i:1:p:1-39 is not listed on IDEAS
    8. Inha Oh & Jeong-Dong Lee & Almas Heshmati, 2008. "Total Factor Productivity in Korean Manufacturing Industries," Global Economic Review, Taylor & Francis Journals, vol. 37(1), pages 23-50.
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    More about this item

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy


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