1.

Please describe the leakage phenomenon and briefly present and discuss the tools of leakage
reduction.
2. Please describe the changes in income inequality and main factors in the period of economic
growth.
3. What is the different between halo and haven hypothesis analyzing the relationship between
foreign direct investment and environmental impact?
4. How to structure the problem in the process of policy analysis?
5. Please describe the contingent valuation method which is used to evaluate the monetary value
of environment.
Answers
1- Please describe the leakage phenomenon and briefly present and discuss the tools of
leakage reduction.
The leakage phenomenon description: it maybe happens when there's an increment or
increase in carbon dioxide emission in one country as a result of an emission decrease by a
second country with a strict climate policy.
The leakage phenomenon caused due to different reasons:
I-Tax differences.
ii- Labor cost differences.
iii-Environmental policy differences.

The tools of leakage reduction:

1-Equalization of taxes.
2-The old rules or grandfathering of emission permits decreases leakage in such sectors
profiting from the free allocation, but moreover diminishes incentive to lower emissions.
3-Price regulation.
4- Yield or output based rebates provide incentives to lower emission intensity
of production, but not its volume.
5-Enhance and promote Clean Development Mechanism and foreign direct
investments especially in developing countries.
 2. Please describe the changes in income inequality and main factors in the period of economic
growth.

Description of changes in income inequality:

Income Inequality can increase because of:

1-Increase of investments.
2-Real growth of wage.
3-Impact of taxes (growth VAT for necessary goods)

Income Inequality can decrease because of:

1-Reduction of unemployment.
2-Increase in minimal wage.
3-Progressive taxes.
4-Social policy.

3. What is the different between halo and haven hypothesis analyzing the relationship between
foreign direct investment and environmental impact?

The pollution halo hypothesis reveals when FDI stimulates the technology transfer, resulting in
cleaner production in host countries when the reduction of environmental impact is observed
considering the Environmental Kuznets Curve and analyzing the role of FDI on environmental
pollution stated that FDI can caused different effects on CO2 pollution. FDI can cause a scale
effect, when FDI promotes the economic growth and dirty production which enhance the energy
consumption and pollution.

Pollution haven hypothesis reveals that FDI promotes economic growth simultaneously and
environmental impact.

FDI promotes economic growth but at the cost of the environment This is known as the
pollution haven hypothesis while, the second hypothesis emphasizes that FDI stimulates
economic growth through technology transfer, productivity gains, and the introduction of new
processes and managerial, which is defined as pollution halo hypothesis.
4. How to structure the problem in the process of policy analysis?
It could be analyzed by: definition or structuring the problem, prediction or forecasting the
problem, prescription of future course of action, description or monitoring of present , past
causes and consequences of acting on policy alternatives. Finally, evaluation of value or worth of
consequences in solving the problem.

6. Please describe the contingent valuation method which is used to evaluate the monetary value
of environment.

1- Preparation of research create questionnaire select respondents.

2- Creation and administration select survey model.

3- Gathering of data, the best if this step is repeated two times.
4- Data analysis and presentation