This study is intended to analyze Taiwan economic development from the perspectives of the New Institutional Economics, to introduce institution and institutional transfer into the historical analysis of Taiwan economic development, and to obtain the empirical significance of institution on economic development. Due to the Japanese colonized policy in Taiwan, and the economic theory of principle for the people by Dr. Sun, Yet-Sen after Taiwan Restoration, the analysis of this study in Taiwan economic development will be conducted before and after Taiwan Restoration. This study will focus on the history of economic development before and after Restoration, and the institutional establishment and its change, and will collect relevant data to analyze and evaluate the interrelation between economic development and institution, and comment the effect of institution and its performance. The findings of this study are: 1¡Bthe national theoretical analysis of The New Institutionalism: Before Restoration, the political aspect of institution was more violent than contractual; rather, after restoration, the political and economic aspects of institution has been transferred from violent to contractual . 2¡Bthe theoretical analysis of Property Rights of The New Institutionalism: Before Restoration, the main purpose of defining property rights was to predate land; after Restoration, the main purpose of establishing property rights system was to assure the security of private property rights to facilitate the development of productive activity. 3¡Bthe theoretical analysis of transactional costs of New Instutionalism: Before Restoration, the establishment of modernized institution was aimed at reducing the transactional costs of investing in the colony by Japanese capitalists, and predating more economic achievement from the colony. After Restoration, the establishment of economic institution was aimed at reducing the transactional costs generated by both transactional factors and human factors, and stabilizing the economic development. 4¡Bthe analysis from the perspective of practical aspects of New Institutionalism: Before Restoration a variety of political measures bas been done to assist Japanese capitalists; after Restoration, the endeavor of sustaining the neutrality of agents and promoting effectiveness of enforcement produced the cooperative behavior, subject to contract. 5¡Bthe theoretical analysis of institutional transfer: Before Restoration, the economic institutional change was imposed, while after Restoration it is also imposed initially, but lately 30 years, inductive.