"1. Introduction “Myanmar has the potential to become Asia's rising star.” This quote came from the Asian Development Bank (ADB, 2012) that reported fast-growing economies and changing in Myanmar since the foreign direct investment (FDI) bringing a lot of money into an area of development. Dawei-Special Economic Zone (SEZ) is the most important one because it has considerably large-scale value of economic and this area is not only linkage of Southeast Asia but South China as well. My question is to examine how Myanmar’s developing institutions have democratized since Dawei- SEZ development in early 21st century. The paper argues that Myanmar has three new patterns of relations which are called institutional arrangements: governing-the market institution, democratic institution, and ethnic institution. The classical theorists of democratization debate modernization and development. On the one hand, Seymour Martin Lipset (1959, p. 75) argues that main condition of democracy is economic development, which he called modernization, that consists of urbanization, industrialization and mass media expansion. On the other hand, Samuel P. Huntington (1968, p. 5) argues that the primary problem of politics is the lag in the development of political institutions behind social and economic changes. The creation of a legitimate public order from political institutions is more important than economic development. Debate centers on the issue of whether democratization should come from either economic development or institutionalization. However, some scholars are still working to compromise theories on factors of democratization that economic development and political institutions are two independent variables having connection with democratization. This research is closer to Huntington than Lipset but institution was revised in more complexity by Marsh and Olsen (1989) work that “rediscover” institution to explain political life again. The paper uses the concept of new institutionalism. The meaning of institution is not only formal rule but it has informal rule also. Institution is the pattern of relation which consists of rule, norm and regulation around economic and political area. The new democracies, especially Myanmar, have to create institution to solve problems in the same way and every group of society accepts this institutional rules. The contribution of research tries to explain three new institutionalizations of Myanmar has arranged since Dawei-SEZ development. Larry Diamond (2012, p. 138) emphasized the transitional period of Myanmar have two types of contest: one is the substantive competition over power and policy outcomes that is minimum requirement of democracy and the other is the constitutional struggle to define rules and procedures to be the only game in town which determine winners and losers in the future. If Myanmar cannot establish one institutional relation in its political system, embedded democracy will not emerge that does not change persistence of political conflict. Analyzing the impact of Dawei-SEZ with in Myanmar institutionalization has two parts. First, the study begins with the new institutionalism concept that is historical institutionalism. Second, a critical juncture of institutional arrangement of Dawei-SEZ is illustrated that have shaped three patterns of relation: the governing-the market institution is the relational of union government and foreign business that government is steering investment. The democratic institution is the relation of National League for Democracy (NLD) and international civil society who move to the election, constitutional amendment and promoted political freedom. The ethnic institution is the interaction of politically ethnic group who is affected by economic development, especially Karen National Union (KNU) and Democratic Karen Buddhist Army (DKBA). These groups have capacity to create selfgovernment and autonomous administration that they want from substantially changing after Myanmar open to the world. This article was inspired from Robert H. Taylor (2001, p. 3) who noted that, “The economy is clearly linked to the other leading issues of the country at this time – the political role of the military; the future roles of the NLD and its leader, Daw Sang Suu Kyi; the future of the ethnic insurgencies following their recent ceasefires; … and Myanmar’s relations with its larger and more powerful neighbors.”..."