Western Australia's manufacturers and miners are spending more on research and development to remain competitive in tough markets.
Australian Bureau of Statistics data shows an additional $265 million was spent on R&D in WA over 2010-11 - an increase of 9 per cent on the 2009-10 year.
The total WA spend reached $3.2 billion, but remained below the peak of $3.6 billion spent pre-GFC.
Manufacturing and mining businesses accounted for most of the increase; up $96 million and $85 million respectively.
WA had the second largest increase of any state in R&D spend, and its proportion of Australia's total expenditure remained the same at 18 per cent.
WA was behind only New South Wales, which invested $6.3 billion, and Victoria, which invested just over $4 billion.
However WA remained the state with the highest level of spend on research and development when compared to its gross state product.
Local businesses have reported a stronger need for expenditure on research and development to remain competitive, specifically in the manufacturing sector.
Matrix Engineering commits 50 per cent of total expenditure on work containing some aspect of R&D, which chief executive Aaron Begley said was vital to the success of the business.