Among the money earmarked in the Budget for research is $166.1 million to develop an Advanced Technology Institute.
Crown research institute Industrial Research Limited is to be folded into new institute, which aims to help high tech firms grow, increase exports and boost productivity.
Export New Zealand executive director Catherine Beard says New Zealand has dragged the chain on investing in new products and services compared with other countries, and she hopes the commitment will encourage private firms to invest more.
She says the new institute provides an opportunity to rejig the Lower Hutt-based IRL's expertise to focus more on development in key markets like Auckland.
Ms Beard says that in the past the IRL has tended to do more "blue sky" research projects that are not necessarily easily commercialised by New Zealand firms. She hopes it will also pull expertise in from universities.
"Research and development is what enables business to innovate and be globally competitive," she said.
"Every other country in the world including the fast-developing Asian economies are putting a lot of money into R&D and the New Zealand investment in research and development, both by Government and private sector, is certainly less than the average of countries we compare ourselves to."
Another $60 million has been earmarked for research into critical issues of the day and an extra $100 million will go to tertiary institutes for research.
Science and innovation minister Steven Joyce says the research sector has been well supported in the amounts of funding secured for the tertiary and wider science sector, particularly in the context of a zero Budget.