Business spending on R&D up more than half a billion dollars

28 February 2019

Research and development (R&D) spending by businesses increased $548 million in the past two years, to more than $2.1 billion in 2018, Stats NZ said today.

“R&D is about innovation and improving products or services. Its aim is to make businesses more profitable, efficient, or reach new markets. However, when a business performs R&D it doesn’t necessarily mean there will always be immediate tangible benefits,” business performance manager Geraldine Duoba said.

“R&D can be a long and iterative process, which means it’s a long-term investment to reach overall improvement.”

Total spending on R&D for all sectors increased $757 million from 2016, to reach $3.9 billion in 2018.

The business sector alone accounted for 55 percent of total R&D spending in 2018. The rise in the business sector’s R&D spending was driven by services industries. Since 2008, R&D spending by services businesses had tripled in size and reached $1.4 billion in 2018.

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The largest increase in R&D spending for the services industries came from other services industries, up $217 million (102 percent) to $430 million in 2018. Many sub-industries make up other services, with the largest contributor being professional services. This sub-industry includes services such as market research, management and consulting, and legal and accounting services.

Computer services also recorded a large increase of $150 million (34 percent) on R&D, to reach $586 million in 2018.

“Businesses had the lions’ share of R&D spending for 2018, but government and higher education spending also had notable increases,” Ms Duoba said.

Compared with 2016, the government sector spent $126 million more on R&D in 2018, to reach $784 million. The higher education sector spent $83 million more, to reach $960 million in 2018.

New Zealand’s R&D spending in 2018 was equal to 1.37 percent of gross domestic product (GDP). Government has committed to raising this to 2 percent of GDP over the next 10 years (see Research and development tax incentive for more information).

The R&D 2019 survey will be sent to the business sector alone, to allow the measurement of the impact of the new tax incentive. Until 2018, the survey had been conducted every two years.

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The diagram shows R&D expenditure by government, business, and higher education sectors and by business sector industries in 2018.

In 2018, the R&D expenditure for all sectors was $3,894 million – up $757 million from 2016.

Government spending on R&D was $784 million, up $126 million from 2016. Higher education spending was $960 million, up $83 million from 2016. Business sector spending was $2,150 million, up $548 million from 2016.

Under the business sector, primary industries spent $100 million on R&D, up $4 million from 2016. Manufacturing spending on R&D was $680 million, up $9 million, and for the services industries spending was $1,369 million, up $534 million from 2016.

Under the service industries, the following was spent on R&D in 2018: wholesale trade, $235 million, up $124 million from 2016; computer services, $586 million, up $150 million from 2016; scientific research and tech services, $118 million, up $43 million from 2016; and other services, $430 million, up $217 million from 2016.

The Government Statistician authorises all statistics and data we publish.

For more information about these statistics:
• Visit Research and development survey: 2018
• See CSV files for download

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