HYPERION ECONOMIC JOURNAL

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• Mohsen Mehrara, Affiliation: Faculty of Economics, University of Tehran, Iran;
• Teymur Rahmani, Affiliation:Faculty of Economics, University of Tehran, Iran;
• Arghavan Novin Vajari, Affiliation:Faculty of Economics, University of Tehran, Iran.

In this study, the effects of trade openness and foreign direct investment on economic growth through the transfer of technology have been examined. To investigate this issue, we use a sample of 19 oil-rich countries over the time period 1991-2006. We estimate two models to investigate this issue. At first, we estimate a model including TO (the ratio of import plus export to GDP) as trade openness, the ratio of FDI to GDP and some other variables as independent variables. The result of this model implies that FDI has positive and significant effect on economic growth while trade openness has negative and significant effect. To examine the negative coefficient of trade openness more, another model is estimated. Export to GDP and Import to GDP were separately considered as trade openness in second model and other variables were same. The result of second model indicates that FDI has positive and significant effect'while both trade openness indices have insignificant effect on economic growth.

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