Research and development activities (R & D) are becoming more and more important for the development of the telecommunications industry. To a large extent they determine the competitive position of firms and nations. Both the equipment and carriers depend on their technological competence. In the past, national R & D systems developed separately, and differed widely from one country to another. With the liberalization of the telecommunications markets and increasing international competition the different national R & D systems have come under pressure and have begun to change. This article describes the structure of national R & D systems at the end of the 1980s and analyses development trends. It summarizes the principal findings of an extensive study into the development of the national R & D systems of the USA, Japan, France, the UK, Italy, Sweden, South Korea, the Netherlands, Spain and the Federal Republic of Germany.