In 2006 businesses in New South Wales spent $3.3 billion on R&D – a third of the national total. New South Wales was the focus of 43% of national business R&D expenditure on services, including 69% of finance and insurance R&D, 41% of computer services R&D, and over half of all national R&D expenditure on communication services.

New South Wales and Australia have a globally competitive research sector with a strong infrastructure base. Australia was rated ninth in the world for the capacity of basic research to enhance economic development, according to the IMD World Competitiveness Yearbook 2007.

The New South Wales Government's Statement on Innovation guides Government support for industries most likely to produce the largest benefit for the State's economy.

The first five industries highlighted are logistics and transaction services, financial services, advanced manufacturing, entertainment, design and media, and resources, including clean coal technology.