The institutional changes to the developmental states in South Korea and Taiwan have been well-documented. This paper offers a theory to recount the states' actual transformation processes in these two cases. Advancing existing insight that the state's transformation process is shaped by the emergence of either concentrated or dispersed economic interests, I argue that a crucial process behind the transformation of the developmental state is a democratic transition of a country motivated by ruling elites' strategic choices. Specifically, a democratic transition in a developmental state is shaped by two consecutive elite decisions: (1) the decision to initiate democratic transition in response to the democratic mobilisation of the middle class; (2) the decision to introduce democratic elections in response to an electoral threat from opposition elites. This process of democratic transition facilitates the emergence of state policy constraints by transforming the political foundation of the state.
