In considering the proposition that national economic prosperity is directly linked to public sector R&D investment, two separate issues must be addressed. Firstly, is investment in R&D a material driver of national prosperity, and secondly, is prosperity best served by R&D investment being publically or privately funded? This paper will discuss both these issues, and will argue that while it is imperative investment in R&D in New Zealand is growing; increased investment by the NZ government is important, but not necessarily imperative.