Lisa D. Cook
I. Banking, Financial, and Economic Crises
The Financial and Economic Crisis: Implications for Consumer Finance and for Households in Michigan
Michigan is the epicenter for the financial and economic crises. As the state with the eighth highest number of foreclosure filings in 2009 and the highest unemployment rate in the U.S., 14.6% in December 2009, the financial situation of Michigan households is changing rapidly and in important ways. While national and regional indices of economic activity have improved with respect to identifying the beginning of a recession contemporaneously, the evidence is mixed with respect to identifying contemporaneously the end of a recession. Monthly indices of consumer confidence and sentiment appear to perform better than other indices in real time. However, both sets of indicators underemphasize credit conditions, which have been central to the current crises, particularly in Michigan. This research seeks to fill this gap.
Economists and other social scientists would be interested to know how households respond to financial and economic shocks. Do they smooth consumption, e.g., adopt and change budgets, as theory would predict? Further, economists may want to know how indicators are changing to better analyze changes in living standards and to predict the magnitude and direction of imminent changes. Policymakers and service providers would be interested in such analysis and appropriate responses, as well as their timing.
There are two components of this research. I seek to devise better methods of tracking and predicting household financial activity using a new survey instrument and to analyze these data, along with related series, to understand and anticipate changes in financial and economic activity in Michigan.
Financial Crises in Transition Economies and Developing Countries
This line of research seeks to answer the question: Does outsourcing property-rights protection generate more consumer surplus than (poorly) protecting property rights in the home country? This and related questions arise from my dissertation research on the Russian banking systems of the Tsarist and post-Soviet periods. Further, do the poor benefit from the underdevelopment of the banking system? That is, do less formal microfinance institutions insulate the poor from financial crises, which are largely confined to the formal, internationally connected sector? Currently, data from the Russian and Nigerian financial crises are being used to answer this question.
As a part of the NBER African Development Successes Project, a separate paper looks at whether the banking reforms of 2005 in Nigeria, which included bank consolidation and the creation of banks dedicated to microfinance, worked, i.e., promoted the stability and development of the banking system and increased access for the poor. (working paper)
II. Patents, Scientific Networks, and Economic Growth
The Idea Gap in Pink and Black (with Chaleampong Kongchareon)
Previous studies have found large gender and racial differences in commercialization of invention. Using novel data that permit enhanced identification of women and African American inventors, we find that gender and racial differences in commercial activity related to invention are lower than once thought. This is despite relatively lower patent activity among women and African Americans. Further, among determinants of commercialization, the evidence suggests that advanced training in engineering is correlated with better commercialization outcomes for women and African Americans than for U.S. inventors as a whole, for whom advanced training in life sciences is more important. (working paper) An extension of this work seeks to understand the mechanisms producing the patenting and commercialization differences among women and African Americans.
Violence and Economic Growth: Evidence from African American Patents, 1870-1940
Recent studies have examined the effect of political conflict and domestic terrorism on economic and political outcomes. New data on patents obtained by African Americans from 1870 to 1940 provide a natural experiment for determining the impact of ethnic and political violence on economic activity. Hate-related acts are found to depress patenting activity among blacks by 19 to 100 percent. Valuable patents respond negatively to extra-judicial killings and segregation laws. In a placebo study, absence of the rule of law covaries with declines in patent productivity for white and black inventors but is significant only for African American inventors. Patenting responds positively to declines in violence. These findings imply that ethnic and political conflict may persistently affect the level, direction, and quality of invention and economic growth.
Russian Scientific Networks
The significance of knowledge transfer for international technology diffusion has been increasingly studied by examining ethnic scientific and entrepreneurial networks. Economists have been especially interested in Chinese and Indian communities in the U.S. and their linkages to their home countries. Despite the Russian diaspora’s relatively larger available pool of scientists, engineers, and mathematicians and a longer history developing such an endowment of human capital, less attention has been given to Russian scientific networks. Very few patents were granted by the government during the Soviet period, and substantially more were granted by the U.S. Patent Office to citizens of the USSR over the same period. The Russian government has attempted to provide incentives for undertaking innovative activities, such as sponsoring scientific competitions and constructing science parks. Have private property and other government incentives provided members of Russian scientific communities been sufficient to increase innovative outcomes in Russia? Fifteen years of U.S. and Russian patent and patent-citation data from the U.S. Patent and Trademark Office and the European Patent Office (Russian) data sets are used to measure the extent to which innovative activities mediated by social or ethnic networks have been undertaken in Russia and other countries of the former Soviet Union. The preliminary evidence suggests that the loci of innovative activity have been the U.S. and Israel, rather than Russia.
Patents and Ghettos: Evidence from African-American Patents and Their Firms, 1976-2004
This paper uses a new data set that permits an empirical investigation of the effects of social interaction on innovation. The data have been constructed from matching African American inventors to U.S. utility-patent data between 1821 and 2005. Exploratory research on this data set reveals four major puzzles. First, until today, 1899 remains the peak year for African American inventors in per capita terms. Second, from 1983 to the present, which includes the longest economic expansion in recent history, patenting rates among African Americans have fallen nearly 46 percent compared to an increase of 59 percent overall. This is surprising, because most changes in the factors that should affect patenting activity among African Americans, including increases in relative and absolute educational attainment in the sciences, have been favorable over this period. Third, a random sample of inventions patented between 1980 and 2000 reveals that, contrary to the general trend observed since the early 20th century, blacks are more likely to be individual inventors than their non-white counterparts and that those who are members of patent teams are more prolific than individual inventors. In addition, African Americans’ inventions are less likely than their counterparts’ inventions to be assigned at issue, irrespective of patent classification. These findings suggest that patent-team formation is not wholly mediated through the market for specialized talent. What are the relevant non-market factors that determine patent-team participation? More generally, which types of social interaction raise inventive activity and increase the probability that invention becomes innovation? I find that residence in a racially integrated neighborhood, association with a federal laboratory, possession of a degree from a California university, and association with AT&T or one of its affiliates raise the probability of being a “social” inventor and member or leader of a patent team. Corporate policy and government policy, related to innovation and more broadly, are likely relevant for each of these decisions by inventors.
The Color of Money: Entrepreneurship and Innovation Among African American ‘Great Inventors’ Before 1920
Financing innovation and investment is a well-studied problem among economists. But the extent to which financing influences the pattern of innovation has been understudied by economists. This paper uses a new data set that permits an empirical investigation of the effects of financing and commercialization on innovation over time. The data have been constructed from matching African American inventors to U.S. utility-patent data between 1821 and 2004. Exploratory research on this data set reveals that, in any given year, patents to African American inventors constitute no more than 0.2 percent of the patents granted. Further, among African Americans, the proportion engaged in inventive activity relative to the overall African American population is small relative to the proportion engaged in inventive activity in the overall population. This proportion has fallen dramatically during the most recent patent boom in the 1990’s, whereas this proportion grew during the patent boom of the 1880’s. A model of financing innovation in an information-poor environment suggests that stronger signals of expected profitability are required of African Americans, or new entrants, to finance innovation. To shed light on this puzzle further, an empirical investigation of the ''great inventors" who are African American is undertaken for the period prior to 1920. The preliminary evidence suggests that the ``great inventors" in the overall population and those among African Americans are strikingly similar with respect to mobility, training, independence, specialization of invention, and responsiveness to market demand for invention. The evidence also points to striking differences between the two groups, particularly financing and commercialization of invention. I find that, among African Americans, core ``great inventors" withhold their inventions from patenting longer and seek public recognition of invention earlier relative to other ``great inventors” to overcome problems in information and to maximize expected market outcomes.
Data Set of African American Patents and Patentees, 1821-2008
The central task in data collection was to identify black patentees, since race is not recorded on patent applications. A first strategy using recent methods of identifying “black names” in the patent databases was unsuccessful. The second strategy was to identify African Americans among the population of inventors and likely inventors and to match them to patent records. This was accomplished by consulting a number of traditional and non-traditional historical and contemporary sources, including surveys, academic journals, directories of scientists and other professionals engaged in scientific endeavors, biographies, and extensive web searches. Archival research on patents before 1920 was conducted at the Moorland-Spingarn Research Center at Howard University. This is the most comprehensive data set of African American inventors and patentees to date.
Intellectual Property and Development
Development economists have begun to take seriously knowledge creation as a fundamental feature of development, as evidenced by the inclusion of “Patents per resident” as an indicator of human development in the UNDP Human Development Report since 2002. A distinct puzzle has emerged with respect to developing countries and the protection of intellectual property rights. On the one hand, in the Doha Round of trade talks, developing countries have sought relaxation of rules with respect to protection of intellectual property rights. Due to the HIV/AIDS crisis, African countries have received an exemption in pharmaceuticals until 2019. On the other hand, patenting in these countries by non-residents and patenting by residents of developing countries in the U.S. have increased significantly in the last decade. Is there greater protection of intellectual property in developing countries? If so, has it had any effect on the level or patterns of growth? Are protection of physical property and the rule of law more important for patenting, productivity, and economic growth in developing countries? This work is an extension of the conflict and innovation work described above but focuses on the current period and on emerging markets. UNDP and World Bank data are being used to address these questions.
Finance and Innovation
The economic significance of this research is that information and financing considerations may result in nontrivial and persistent changes in inventive activity, the source of improvements in technology that allow sustained increases in per capita income. While this research is related to the above research on ‘great inventors’, it also focuses on current emerging markets. One paper examines the relation between underdevelopment in the banking sector and underdevelopment of innovative activity using patent office data from Tsarist Russia (1880-1913) and post-soviet Russia (1990-2005).
Another project being developed with Raoul Minetti focuses on the financing of innovation in emerging markets, more generally. This paper uses World Bank survey data (from managers of firms in Africa, Asia, Central and Eastern Europe, and Latin America) and data from the European Central Bank.
Confederate Patents and Property Rights
Southerners and slaves were largely skeptical that their intellectual property rights would be best protected by the U.S. Patent Office prior to 1865. While there was significant innovation, especially in agriculture, in the South, there was little formal protection sought of protection of ideas. Slaves mistrusted the U.S. Patent Office, because it would not grant patents to a slave (non-person) or to a slave-owner on behalf of the slave. Between 1830 and 1860, there are several well-known cases of denial of patents to those who were slaves and their masters and blacks thought to be slaves. The Patent Office of the Confederate States of America (CSA) opened in 1861 and extended the right to patent to slaves. Although Southerners and slaves should have been afforded a greater incentive to innovate, there has been no investigation of the extent to which new knowledge was produced in the CSA. I have collected data from the archives of the CSA Patent Office at the Museum of the Confederacy in Richmond, Virginia, and am exploring these data to address this question.
III. Trade and Manufactured Exports
Surveys of firms and government entities in Egypt, Ghana, Madagascar, Namibia, and Tunisia were conducted between 1999 and 2002 to understand the mechanisms by which manufactured exports were undertaken in developing countries. Export processing zones and related policies were examined and continue to be examined. (Ghana and Tunisia papers) Often countries adopt such policies to address shortcomings in the rest of the economy, e.g., clear title and property rights and access to infrastructure, that would be critical for manufacturing and exporting high-value (-added) products.
Another line of research focuses on explaining Africa’s recent growth spurt. Was it due to high commodity prices? Alternatively, was it due to better economic management and institutions? Co-author Laura Beny and I found that both partially explain recent increases in growth in Africa through 2008. (Article)
© 2011 Lisa D. Cook