The 1997 Asian economic crisis has brought a catastrophic impact to the Indonesian economy, resulting in the Indonesian economic crisis. The Indonesian currency (rupiah) declined drastically against the US dollar. The debt of both government and private sector as the root of the crisis in Indonesia has caused the demand for US dollar to increase and consequently decreased the rupiah value against the US dollar.
The economic crisis affects the health sector severely, especially the health of the poor. Health sector financing share in Government expenditure was reduced, owing to the decrease in GDP. In certain areas, the economic crisis has caused infectious disease cases such Malaria, Tuberculosis, and diarrhoea to increase due to the rising price of medicine. Furthermore, poverty reduced the ability of the poor households to maintain their health, and reduce their ability to obtain necessary medical care. Moreover, the existing health service providers suffered from operational budget, hence reduced their ability to provide good quality medical care as well as expand their services to the poor and the vulnerable.
This thesis is aimed to analyse the impact of the 1997 Indonesian economic crisis on the health sector in Indonesia. The analysis is focused on infectious diseases, health infrastructure, and health status. Aside from literature research, this thesis will also provide regression analyses using OLS method. The variables used as proxies for the Indonesian economic crisis are inflation rate, per capita GDP and expected individual welfare. The health sector variables will be presented by infectious disease (number of dengue cases and rate of diarrhoea cases), health infrastructure (number of health centres and pharmaceutical production firms), and health status (total, male, and female life expectancy at birth).
The literature review findings of this thesis suggest that the Indonesian economic crisis has caused severe impact on the health sector of Indonesia. However, the findings from the regression analyses conducted in this thesis suggested that Indonesian economic crisis did not cause impact as severe as pointed out by the literature. Although some relations do exist between health variable and Indonesian economic crisis proxies, the onset of the economic crisis itself did not alter or did not have any effect on these relationships. Hence, further research is warranted in order to provide results for comparison