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Business Expenditure on Research and Development in New Zealand – future potential and future industries

Published in August 2008

Summary

This paper reports a study of business expenditure on research and development (BERD) for New Zealand and selected other countries for comparison.

BERD studies are important because BERD supports firms’ technological progress. They are particularly important for New Zealand because our BERD intensity is low (0.49% of total GDP) compared with an intensity for OECD nations at an aggregate of 1.53%.

BERD metrics can be calculated in different ways. In this study we are concerned with the BERD Intensity Gap. This is the difference in respective BERD-to-GDP percentages for New Zealand and the OECD aggregate.

We split out the BERD intensity gaps into 'structure' and 'intensity' components. This tells us about the respective influence on BERD of a nation’s industrial composition, and the likelihood of firms investing in research and development (R&D).

We also subdivide each of these components into industry-level contributions so we can inspect measures of BERD intensity gaps at the industry level.

We re-estimate the metrics using estimates of industry-specific prices for R&D. In this way we attempt to express BERD in real terms

The total BERD intensity gap, the structure and intensity components and the industry manifolds form a useful indicator set. We use it to monitor changes in BERD for New Zealand and other nations. This indicator set will be useful for planning, implementing and monitoring R&D policy and strategies.

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