Magazine article New Zealand Management

Statistics and Lies

Magazine article New Zealand Management

Statistics and Lies

Article excerpt

If United States investors were furious with the Federal Reserve last month for leaving a vital sentence out of its monthly policy statement, try this local example of sloppy reporting for size.

The Ministry of Research, Science and Technology (MoRST), doing its bit for the research component of its name, sponsors the research and development survey conducted by Statistics New Zealand. The results of the latest survey announced last month showed total R&D expenditure in 2004 was $1.6 billion, up 13.1 percent from 2002.

More precisely, R&D in the 2004 reference period was 13.1 percent higher than in the 2002 reference period--this deals with the problem that some data gathered come from a 2003/04 financial reporting year; some come from the 2004 calendar year.

The biennial survey measures the level of R&D activity, employment and expenditure by private sector enterprises, government departments, government-owned trading entities, and universities.

After the 2002 survey, Statistics New Zealand reviewed the methodology, evaluated the survey outputs and made several changes for the 2004 survey. Therefore, be careful when comparing data from 2004 with previous surveys.

Total R&D expenditure by the private sector in 2004 was $648.1 million, spending by government sector (excluding universities) was $498.4 million, and spending by universities was $454.8 million. The private-sector expenditure was a hefty 24.5 percent more than in 2002. Government sector (excluding universities) and universities' expenditure increased 8.4 percent and 4.4 percent respectively.

But as Statistics New Zealand points out, the reported increase for the private sector may have been affected by changes in the sample design. When investigating 536 private sector enterprises that were common in both the 2002 and 2004 surveys, there was a 9.5 percent increase in expenditure on R&D.

Total R&D expenditure recorded from the survey was 1.17 percent of New Zealand's gross domestic product. The private sector has been trending upwards over the past decade, from 0.26 percent of GDP in 1996 to 0.47 percent in the latest survey period. Over the same period, government sector R&D expenditure as a proportion of GDP has declined slightly, but continues to be above the OECD average.

R&D activity

Three main types of R&D are embraced by the survey:

* Basic research ($564.1 million in 2004) is carried out to pursue a planned search for new knowledge with either a broad underpinning reference, or no reference to a likely application.

* Applied research ($595 million) is investigation undertaken to acquire new knowledge. It is directed primarily towards a specific practical aim or objective and determines possible uses of basic research. …

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