Trade openness is adjudged a potent driver of industrial growth. But the Nigerian case is different, empirical evidence show that about 70 to 97 percent of the major products of the industry are imported for domestic consumption indicating that the industry is under performing. Hence, the study examines the impact of trade openness on petroleum and natural gas sub-sector growth in Nigeria from 1981 to 2020. Auto Regressive Distributed Lag (ARDL) econometrics technique was employed in the analysis of the study. The ARDL Bound Test Co-integration, ADF unit root test and some diagnostic tests were conducted. The results of the short run analysis revealed that trade openness triggered the performance of the petroleum and natural gas sub-sector. Foreign direct investment and Foreign portfolio investment were not positively related to petroleum and natural gas sector during the period under consideration. Based on these findings, the study recommended that government in Nigeria should reduce duties on the import of capital goods into the petroleum sub-sector to improve local refining to enhance the export of refined products; promote peace and security in the oil-bearing regions through holistic development as this could attract more foreign investors into the industry. Also, government should encourage modular refineries to complement the main refineries.
Keywords: economic growth, petroleum and natural gas, trade openness
