The trends and the trajectory of higher education research expenditure in South Africa since the introduction of the New Funding Formula in 2004 have been analysed. The paper also compares the level of South Africa's total gross expenditure on research and development with those of other selected economies. The findings show that following introduction of the New Funding Formula there has been a significant increase in higher education research expenditure in South Africa. It was also found that although South Africa's total gross expenditure on research and development, as a percentage of GDP, is currently the highest in Africa, it is still lagging behind countries such as China, Russia and Brazil. The study therefore recommends further investment in research and development in South Africa so that the country can achieve its vision of becoming a knowledge-based economy.