• Journal of Technology Innovation
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• v.13 no.1
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• pp.213-246
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• 2005

Despite of the impressive progress made in the Evolutionary techno-economics during the last two decades, there have been very little, if not at all, theoretical advancement in explaining an endogenous mechanism of transforming a technological paradigm within self-perpetuatingstructural dynamics. The question poorly attempted was raised by Schumpeter a century ago in his effort to overcome the well-known 'Walras' trap'. Although there have been increasing number of researchers recently tackling the issue quite seriously from within the Evolutionary school, I see it that radical reconstruction of the basic principle of Evolutionary research framework is urgently needed to solve the century long fundamental question, from evolutionary approach to transformational approach. In the paper, I will show the theoretical feasibility of explaining an endogenous mechanism of paradigm transformation, relying upon the concept of localized dynamics and the concept of morphogenetic structuration. It should be emphasized that there must be aendogenous process of deepening structural Instability generated in the process of economic coordination to secure efficient circular flow. The concept of development bottleneck initiated by the Baumol's cost disease could be regarded as one of the important source of such mechanism. Unfortunately, however, it is a brief conceptual description presented in the paper rather than a comprehensive analytical model, due to the space limitation imposed.