Forum: R&D stats paint useful picture of investment

The good news is the types of investment being made seem heavily weighted to the top end of the value scale

It seems as if, in almost all areas, New Zealand is permanently chasing after OECD averages. We hear about this all the time, especially in relation to telecommunications. Unsurprisingly, it is no different in Statistics New Zealand’s latest R&D report, undertaken with the Ministry of Research, Science and Technology and released last week.

And, buried deep inside the report, which covers the 2006 year, we can find some interesting data on R&D in the computing sector.

Overall the R&D stats paint a picture of significantly improved investment, with R&D spending exceeding $1.8 billion, up from $1.66 billion in 2004 and well up on the late 1990s. However, Statistics New Zealand notes at least some of the increases noted between 2000 and 2004 are due to changes in methodology.

Investment by business, government and higher education have all grown, but business spending has grown the most, reaching $763 million in 2006. Despite that, this sector still lags OECD averages for investment while the other two lead those averages, so further improvements are required, especially as investment by the private sector is likely to be tightly tied to achieving commercial benefit.

Overall, while progress appears to be happening, New Zealand still lags OECD averages for R&D spending.

Anyway, the terms “information technology” and “computer” are notable by their absence in the main part of the report, but do feature further down in the “additional tables” section to give insights into trends in our industry.

Business R&D spending by the computing services sector grew from $89.9 million in 2004 to 104.9 million in 2006. The results also paint a picture of many very small firms investing more than half of total R&D funds.

165 firms with less than 50 employees invested $56.3 million out of that $104 million total. Ten firms with more than 50 employees invested the rest, but this is up from seven firms in the 2004 survey. The small scale of firms investing in R&D in New Zealand is not unique to the computing sector but does appear to be somewhat more marked there.

The good news is that the types of investment being made seem heavily weighted to the top end of the value scale. Only $4.9 million was invested in what is defined as basic research while $23.5 million went on applied research and $76.5 million on experimental research. The sector accounted for 14% of the total R&D identified, while it contributed 18% of the investment tagged in this experimental category.

There has been some suggestions that increases in R&D expenditure are simply a result of more investment being recognised due to increased government support. Or rather, that businesses are “recategorising” spending they were already undertaking to benefit from incentives.

Undoubtedly this will be true to some unfathomable extent. However, I’m sure this is also true in most of the OECD countries we are comparing ourselves to. My take is that the statistics are still quite thin, but are heading in the right direction and heading there relatively quickly. Let’s keep it up.

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