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By silicon.com, 20 July 2005 15:25

The European Commission has sounded a warning over the stagnant growth of R&D spend in the Union. And rightly so.

Among the causes for the slowdown are a drop in business funding and an apparent trend away from carrying out research in Europe - even for EU-based companies - in favour of places like the US and China, according to the EC research.

This publication has said before that investing in R&D is essential to the success of IT companies - to allow them to continue to benefit society as well as potentially their own bottom line. And we'll say it again.

For evidence, remember that the biggest names in tech - Nokia, IBM and Microsoft - are also the biggest spenders on research.

Looking at R&D 'intensity'- R&D investment measured as a percentage of GDP - is also important. Because the largest companies tend to spend the largest amounts in terms of pounds or euros, judging spending as a percentage of sales or GDP reveals a company or country's commitment to research. And on this is where the EU is really falling short.

EC research shows growth of R&D intensity has been slowing for five years and is now approaching zero.

This trend must be stopped. If business funding is in short supply, the government needs to do more to make up for it. The EC noted government funding has grown more than private funding in recent years but it's apparently not enough.

One MP has suggested the UK in particular needs to adopt some US-style legislation that would grant more cash to homegrown start-ups.

More ideas like this are needed, as is a willingness by businesses themselves to allocate greater portions of their hard-earned sales to R&D.

Doing so won't result in a pop in stock price (the need to satisfy investors in the short term is certainly contributing to the reticence to spend on projects that won't reap returns for years). But it could make sure your business and your country are still in the running come the next generation.