NZ companies lift spending on R&D but still lag behind OECD average

Increased spending by businesses helped boost New Zealand's total research and development expenditure 20 percent since 2014, but the country still lags behind the average for the Organisation for Economic Cooperation and Development.

Total R&D expenditure hit $3.2 billion as businesses spent 29 percent more than they did in 2014, higher education invested 18 percent more and the government spent 5 percent more. The Statistics New Zealand survey is conducted every two years.

According to Stats NZ, total R&D as a proportion of gross domestic product increased to 1.3 percent in 2016, up from 1.2 percent in 2014. The OECD average is 2.4 percent. Business investment in R&D, however, was 0.6 percent of GDP, up from 0.5 percent in 2014.

Innovation is seen as one of the ways to lift New Zealand's productivity levels, which has been more difficult to achieve given the nation's relatively small economy and distance from other markets. Last year, then Innovation Minister Steven Joyce flagged an extra $410.5 million to fund science projects over the following four years as part of his drive to grow business investment in R&D to more than 1 percent of the economy.

In 2016, businesses spent a total of $1.6 billion on R&D, up $356 million from 2014. This change was driven by the services and the manufacturing sectors, up 32 percent and 29 percent, respectively. The computer services industry, which includes businesses involved in software production or web design, had the largest growth in R&D spend, up 40 percent from 2014

In contrast, the government and higher education sectors showed more modest growth in R&D spend - a $32 million increase for government spending and a $143 million increase for higher education spending.

Twenty percent of all R&D was to improve or develop manufacturing processes in 2016, Stats NZ said. Government spending on R&D was largely for primary industries and environment, and higher education expenditure was focused on health research.

Meanwhile, businesses remained upbeat about future spending. In 2016, 85 percent of businesses undertaking R&D activity expected their future R&D spending to stay the same or increase, up from 81 percent in 2014. Only 9 percent of businesses expected R&D spending to decrease in the future, down from 13 percent in 2014.

In 2016, 54,500 people were involved in R&D, up from 51,600 in 2014. The increase was mainly driven by more researchers in the business sector.

(BusinessDesk)