Silicon Valley, the Californian region where many of the IT industry’s biggest companies began, is in danger of losing its innovative edge, according to a new report from an organisation representing its business interests.

The Silicon Valley Index 2010 found that the region lost 90,000 jobs between the second quarter of 2008 and 2009. That coincided with a slight deceleration of innovation – one percent fewer patents were filed by organisations in the region compared to 2008 – and of venture capital investment.

A decline in the number of immigrants was slight – again by just one percent – but it was the first decline since 2004. This represents a challenge to Silicon Valley’s ability to innovate, the report argues. “Immigrant entrepreneurs have contributed considerably to innovation and job creation in the region,” it says.

"Silicon Valley’s innovation engine has driven the region’s prosperity for 60 years, but at the moment we’re stalled," said Russell Hancock, CEO of Joint Venture, an organisation comprised of the Silicon Valley Network and Silicon Valley Community Foundation, two local industry bodies. "What’s hard to say is whether we’re stuck in neutral, which has happened before, or whether it’s time now for a complete overhaul."

The region  “competes at a very high level with other advanced regions in the global economy,” the CEOs of each organisation wrote in the introduction to the report. “But we must continue to build on these strengths if we are to maintain our position in a world that is rapidly rising to challenge us.  From the rise of Asian economies to California’s budget meltdown, our future will in many ways depend on how we respond to forces emanating beyond our region.”

There was some good news for Silicon Valley, however, in the form of green technology. The number of jobs in “businesses that provide products and services to reduce our dependence on fossil fuels, improve resource conservation, and reduce pollution” has increased 8% since 2007 to 14,000.