Total expenditure on research and development, (R&D), in Northern Ireland, decreased by 2%, (£7.1million) to £344million, in 2008.

This was due to decreases of £7.1million (-4.7%) in higher education R&D expenditure and £1.2million (-0.6%) in business R&D expenditure coupled with an increase of £1.2million (8.2%) in government expenditure over the year.

Of the £344million spent on R&D, £183.9million (53.5%) was spent by businesses, £144.2million (41.9%) by the higher education sector and the remainder was other government expenditure.

This is the first time that business R&D expenditure has fallen since 2003. However, between 2003 and 2008, overall business R&D expenditure increased by 51.6% in cash terms (from £121.3million to £183.9million).

The manufacturing sector accounted for the majority (62%) of business R&D activity in 2008. R&D expenditure in the sector rose by 10.2% over the year to £114.3million. In contrast, there was a large decrease in the services and other sectors, with R&D expenditure down over the year by 14.4% in cash terms to £69.7million.

Externally owned companies accounted for 60.3% of such expenditure compared to 39.7% by locally owned companies. R&D expenditure by locally owned companies decreased by 9.1% (£7.3million) over the year compared to an increase of 5.9% (£6.1million) by externally-owned companies.

Total SME expenditure fell by £11.1million (-9.5%) from 2007 to 2008, in cash terms. However, since 2003 it has increased by 88.1% to £106.1million.

Of the 12 UK regions, seven showed a decrease in in-house business R&D expenditure in cash terms over the period 2007-2008 including Northern Ireland which decreased by 3.6%.

This was the third biggest percentage decrease across the UK regions. In-house R&D expenditure for the UK as a whole increased by 1.7% over the year.

Commenting on the figures, NI Enterprise Minister, Arlene Foster said: "Expenditure on R&D remains business critical, not a luxury that can only be indulged in time of prosperity.

"While there has been a small decrease of 0.6% in business R&D in 2008 it is reassuring to note that over the last five years expenditure has increased by 51.6%. Businesses must continue to invest in R&D and recognise that research and innovation are crucial to remaining competitive in the post-recession global economy."

The Minister continued: "Here in Northern Ireland we have always known that the only way for us to compete and increase our standard of living is to move rapidly into new high-technology, high value-added industries and secure our global reputation for leading the world in key strategic areas of R&D exploitation.

"It is very important that our indigenous companies, many of whom are SMEs, continue to invest in R&D.

"These are the companies, especially when working together in new and dynamic collaborative R&D based ventures, which will propel our economy into growth when the upturn finally arrives," she concluded.

(BMcC/KMcA)