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Innovation Expenditure on R&D

Research and development (R&D) activity refers to systematic investigation or experimentation involving innovation, the outcome of which is new knowledge, with or without a specific practical application, or new or improved products, processes, materials, devices or services.

R&D plays a crucial role in technological development and the competitiveness of a country. It is often a key step in the innovation process.

Industries that are more knowledge intensive tend to invest more in R&D. Literature has shown that R&D related activities can explain up to 75 per cent of the total factor productivity growth once externalities are considered; see the 2016 Australian Innovation System Report for further details.

R&D expressed as a proportion of GDP is used as a measurement of an economy’s relative degree of investment in generating new knowledge. Higher education, government and business are the key sectors that invest in R&D.

Growth in developed economies is increasingly driven by investment in intangible assets. Intellectual property products are the result of creative activity, research and development, or investigation and innovations leading to knowledge that the developers can market or use for their own benefit.

Investment in IP and other forms of intangible capital can facilitate business growth and improve productivity.

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