The developmental state and chaebols as two important institutions for the Korean economic development were criticized as the main culprits of the Korean economic crisis in 1997. The Korean government and IMF saw the Korean economic crisis as the problem of the inner social structures. They tried to reform these two institutions to recover the Korean economy. They also tried to end the rule of the developmental state and dismantle chaebols. But the Korean economic crisis was actually caused by the economic cycle of the world economy. The Korean economy recovered when the problem of the foreign debt crisis was solved without changing the developmental state and the chaebol system. The two institutions persisted after the reform and even became stronger. These institutions were too strong to be reformed by the reform efforts of the government. The persistence of these institutions can be explained well by the path dependency theory.