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Innovation Index
of New Zealand / 2013

Changes in Innovation since 2007

R&D growth stayed strong during the Global Financial Crisis (GFC), but slowed as the economy recovered

R&D expenditure grew strongly between 2007-2010 – at an average rate of 7.6% p.a. – during the Global Financial Crisis and the subsequent recession. However, when the economy started to recover during 2011-12, R&D expenditure went the other way, slowing to an average increase of 3.7% p.a. The combined effects of slower R&D growth and a return to normal GDP growth meant that R&D intensity (the proportion of GDP spent on R&D) fell in the two years to 2012.

Public Sector drove R&D growth during GFC...

Strong growth in Public Sector R&D was the biggest component of R&D growth during the GFC. In the 2008-10 period, more than half of new R&D expenditure went towards Higher Education institutions, and nearly three-quarters of new R&D funding came from the government.

...but declined during the recovery...

Public Sector R&D spending increased by $205m between 2008-10, but fell by $33m between 2010-12. Of that $33m, $21m came from Environmental research, $6m from Education, and $5m from Economics. However, at $196m, Environment is still one of the key investment areas for Public Sector R&D, second only to Primary Industries at $213m.

...with Private Sector R&D growth partly filling the gap

During 2010-12, Public Sector (excluding Higher Education) R&D expenditure fell. Most of the growth during this period was driven by increased Private Sector expenditure (Manufacturing in particular), which grew by $222m. Higher Education institutions have been funding their own research more, with the proportion of self-funded research growing from 24% in 2010 to 28% in 2012.

R&D employs 50,000 New Zealanders...

In 2012, nearly 50,000 New Zealanders were employed to conduct R&D. Of those in 2012, 35,000 were in research roles and the remainder were in support roles.

...and was particularly crucial during the GFC

R&D created the equivalent of 4600 full-time jobs between 2007-10. During the same period, the equivalent of 12,600 full-time jobs were lost across the economy as a whole.

Higher Education researchers are becoming more part-time

Higher Education institutions are employing more researchers, but those researchers are spending less time in their research roles. In 2010, an average researcher at a Higher Education institution spent 63% of their working week on research; in 2012, this fell to 56%.

Manufacturing is still the main purpose of Private Sector research; Primary Industries racing ICT for second place in Private Sector R&D

Nearly a third of Private Sector R&D expenditure goes towards improving Manufacturing, followed by ICT and Primary Industries at a distant second and third. However, R&D expenditure for improving Primary Industries grew by $60m between 2010-12, putting it virtually on par with ICT.

Applied R&D is thriving

Applied R&D expenditure grew by 46% between 2008-12, much faster than Experimental R&D, which grew by 14% and Basic R&D, which grew at 3.4%. The growth in Applied R&D is driven by strong investments by the Private Sector, which grew by 44%, and Higher Education, which grew by 82%. Although Private Sector investment in Experimental R&D grew, this has been offset by cuts in Higher Education investment in the area.

Business Innovation steady overall

Since measurement started in 2007, overall Business Innovation has remained steady with 46% of businesses reporting some form of Business Innovation. Of the overall category, Marketing Innovation is the only one of four measures that has grown during this period, from 25% in 2007 to 27% in 2010, an 8% increase.

Education, Arts and Finance lead Business Innovation

The Education and Arts industries reported most Business Innovation with 62%, followed by the Finance and Insurance industry at 61%. Agriculture, Forestry and Fishing was the least innovative, with only 26% reporting any kind of Business Innovation.

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