Small and medium-sized industries comprise an area of interest for industrial policy that aims to reduce unemployment and fight poverty in developing states and advanced industrial nations irrespective of their economic philosophies and macro-economic style of management. Small and medium-sized industries hold particular importance for building an industrial base. They also have a role in industrial integration and the creation of integrated production chains. The GCC countries have given increased attention to small and medium-sized industries over the last 20 years. Incentivizing policies and measures have been adopted, including incubators for small enterprises, development funds, youth programs, and the establishment of development companies for industrial zones devoted to small and medium-sized industries. The latest available statistics for 2011 indicate that the number of plants operating under the rubric of small and medium-sized industry formed 83.1 percent of all manufacturing plants in the GCC countries, accounting for 3.9 percent of total investment in the industrial sector and employing 45.2 percent of the industrial labor force. Within this context, this paper aims to shed light on the developmental significance of small and medium-sized industries. In doing so, it aims to clarify their main features, specifics, and advantages; their economic importance for the GCC states; and their role in development, supporting exports, and delimiting the challenges and obstacles their development faces.