Hong Kong's gross domestic expenditure on research and development increased from $9.5 billion in 2004 to $12.3 billion in 2008, representing an average annual growth rate of 7%, the Census & Statistics Department says.

According to the March 2010 issue of the Hong Kong Monthly Digest of Statistics released today, spending on research and development performed by local business establishments dropped 13% to $5.27 billion.

More significant drops in expenditure on in-house research and development were recorded in the manufacturing sector and the import and export trades sector.

Business establishments were generally adversely affected amidst the global financial crisis in 2008. The gloomy business conditions resulted in some of the establishments suspending or postponing their research and development projects.

In 2008, research and development expenditure in the higher education sector rose 10% to $6.65 billion while the figure for the government sector surged 28% to $379 million.