Photo: 123RF
Reducing financial risks or upping rewards for investors and companies could make it more attractive to invest in research and development.
Spending on research and development increased 11 percent between 2020 and 2022, to a total of $5.2 billion.
This investment was led by the business sector and followed by higher education and government.
But New Zealand's spending was still about half of other leading economies.
The average research and development (R&D) expenditure as a proportion of GDP across Organisation for Economic Co-operation and Development (OECD) countries was 2.74 percent in 2020, compared to only 1.46 percent in New Zealand.
Senior consultant at economic research consultancy BERL, Nick Robertson, said New Zealand does not offer the same investment opportunities for local companies compared to its OECD peers.
This could lead to stagnation, he said.
"How do we incentivise investment in R&D over other options or less productive options, like housing?
"We're seeing the growth in housing investment and that's really an unproductive asset, it doesn't do anything for improve our productivity, it just drives up house prices.
"If there was an incentive to help reduce the risk of investing in R&D, or to encourage investment in R&D, then we could possibly shift some of the investment away from the least productive investments towards more productive investments that will push productivity lead to the wellbeing gains that come along with it."
Robertson said government funding for research and development efforts by businesses were a good start, but there was more work to do.