Even though institution has not been analyzed as the main determinant in
the traditional economic growth model, institution could affect the economic
growth and development when the country’s economic environment is
changed. Korean economy has experienced many economic environmental
changes since 1990 and institutions could be one of the important constraints
in Korea’s economic growth.
In this paper, we analyze the determinants of Korea’s stagnated economic
growth in the aspects of institutional economics and suggest the strategies for
the economic development of Korea. In the short-term, new industrial policy
should be constructed to improve the new growth engines’ competitiveness and
new pension system should be established to stabilze worker’s wage. In the
mid-term, it is important to change the wage and employment structures in
order to improve the early retirement system.