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New Zealand continues to lag in R&D spending

Paul Brislen, Editor. 09 February 2017, 7:33 am

New Zealand continues to spend around half the OECD average when it comes to research and development and the private sector shoulders most of the blame.

Government spending on R&D is broadly in line with other nations around the developed world, but when it comes to spending in the private sector, businesses in New Zealand simply don't invest in R&D to any great degree.

The difference lies in the realm of indirect government spending, that is tax incentives and other similar programmes of work.

While New Zealand directly spends a large amount of R&D (0.06% of GDP), it spends nothing at all on indirect incentives. Those countries that are held up to be world leaders in R&D - Israel, South Korea and Japan - spend far more on indirect incentives than on direct payments. 

In 2015, 28 of the 34 OECD countries and a number of non-OECD economies gave preferential tax treatment to business R&D expenditures. Yet only two coutries - New Zealand and Mexico - decided to stop their tax incentive programmes.

Breaking down the areas where New Zealand does spend on R&D, business services has more than doubled in value between 2005 and 2014 (from $310 million a year to $632 million a year), while computer programming and consultancy has leapt from $104.9 million to $311 million a year. Spending on R&D in the agricultural sector has moved from $51.7 million to $92 million in the same time frame.

New Zealand employs 10.4 researchers per 1000 employed people, just behind Greece with 10.5/1000. That compares with Australia at 12.6/1000 and world leader Israel which employs 21.4 researchers per 1000 employees.


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