The co-ordination of investment decisions within an enlarged market would enable the integrating countries to take advantage of complementarity and scale, and hence reduce the cost of their development. The case of the Arab Middle East countries is found uniquely instructive, and many of the observations on these countries have equal applicability to most developing countries. Although these countries have developed as distinct political and economic entities, several attempts have been made to promote their economic integration. However, a new phase of economic development and integration is emerging in the Arab region. The oil industry, though existing in only some of the Arab countries, carries with it the seeds of change and regional integration. The industrial sector in the Arab countries seems to be a fertile terrain for integration. It is rapidly becoming apparent that the emerging patterns of industrial growth are not in the long-term interests of the Arab countries.