This paper has explored the causes of decreasing corporate investment and its consequences on the economic growth potential. For theoretical and empirical findings, three models are used: accelerator model of investment, Classical growth model, and R&D based endogenous growth model with capital. 

Main findings are as follows. First, from the estimation of an accelerator model using Korean data from 1981 to 2005, labor disputes and lowered productivity reduce investment while the recently lowered interest rate does not stimulate investment. In addition, effective corporate taxes and uncertainty of regulation have a significantly negative effect on investment. 

Second, from the simulation of Classical growth model, the steady-state gross investment rate is lowered to 24.6% from 27.8% due to lowered productivity, decreased population growth, and higher capital income tax. In along with the lowered investment rate, economic growth rate is down to 4.343% from 5.605% during 2001-10, down to 3.681% from 6.027% during 2011-20, and down to 3.697% from 6.115% during 2021-30. The lowered productivity has a more dominant effect on lowering economic growth than higher capital tax rates and lowered population growth.

Third, from the estimation of two equation system implied by R&D based endogenous growth model using Korean data from 1970 to 2005, R&D intensity significantly stimulates technological innovation and hence economic growth in the steady-state. Increasing R&D intensity by one percentage point increases the growth rate of output per capita by 0.088 or 0.332 percentage points.