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Science and Research3.5 International Comparison

3.5.1 Gross expenditure on R&D (GERD) as a share of GDP

Gross expenditure on R&D (GERD) is a key headline measure of a country's aggregate R&D activity. It is the sum of expenditures on R&D across all sectors of the economy, namely the business, government, higher education and private non-profit sectors. Australia's latest GERD estimate published by the ABS is $33.1 billion in 2017–18, which represents an increase of around 6.0 per cent from $31.2 billion in 2015–16.[98] However, Australia's national R&D intensity (GERD as a share of GDP) decreased from 1.88 per cent in 2015–16 to 1.79 per cent in 2017–18, remaining below the OECD average of 2.34 per cent in 2017. In the same period, Israel and South Korea had the highest national R&D intensities, 4.82 per cent and 4.29 per cent, respectively. National R&D intensity in Australia peaked at 2.25 per cent of GDP in 2008–09 and has been declining ever since.[99]

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3.5.2 Gross expenditure on R&D (GERD) as a share of GDP by sector

GERD is the aggregate expenditure devoted to R&D by the business, government, higher education and private non-profit sectors. The largest component is business expenditure on R&D (BERD) and its stagnation in recent years has been a major factor driving the decline in Australia's GERD as a proportion of GDP (or national R&D intensity). The latest BERD to GDP estimate is 0.94 per cent in 2017–18, which represents a continuing decline from 1.18 per cent in 2013–14 and 1.00 per cent in 2015–16. Government expenditure on R&D as a share of GDP (GovERD to GDP) has also been declining but not nearly to the same extent, with latest estimate at 0.17 per cent in 2018–19. Meanwhile, higher education expenditures on R&D as a share of GDP (HERD to GDP) has remained relatively steady over the last five years or so, with the latest estimate at 0.62 per cent for 2018.[100] With BERD being a key driver of Australia's overall R&D intensity, the GERD to GDP estimate should be interpreted in the context of other information, particularly factors affecting the major contributors, most notably the Mining and Manufacturing industries.[101]