Research and development spending up, still lags Australia

New Zealand's spending on research and development rose 13 per cent last year, though the nation still under-spends Australia relative to its economy, suggesting a greater effort will be needed to close the economic divide through innovation.

New Zealand spent a total of $2.4 billion in 2010 on R&D compared with $2.2 billion in 2008, according to Statistics New Zealand's latest survey.

The biennial study, a joint venture with the Ministry of Science and Innovation, measures the level of R&D activity, employment and expenditure by business, government departments and trading entities, and universities.

The survey found total R&D spending accounted for 1.3 per cent of GDP last year, up from 1.2 per cent in 2008.

Australia's spending on R&D accounted for almost 2 per cent of GDP in 2006, the latest figures available In 2008, the OECD average was 2.3 per cent.

Still, the 13 per cent growth notably outstrips the equivalent 4 per cent GDP growth since 2008.

Breaking down the numbers, university spending on R&D rose 23 per cent to $802 million, business sector spending rose 10% to $1.01 billion, and government spending rose 8 per cent to $629 million.

Funding of R&D from the government accounted for 46 per cent, or $1.1 billion, of all R&D funding last year. The business sector funded 38 per cent, or $940 million, with the relative proportion of funds by business compared with government falling when compared with 2008.

The proportion of R&D expenditure funded by local universities and overseas sources was 8 per cent and 5 per cent respectively, with 2 per cent sourced elsewhere.

Manufacturing accounted for the largest proportion of R&D at 18 per cent, followed by the primary industry at 16 per cent, health at 15 per cent, and the environment on 12 per cent.