Over the past decade the economies of East Asia and APEC more generally have beenincreasingly opening up their markets, and in the process have achieved significantgains in exports and economic growth. In conjunction with this increased economicintegration, there has been increased recognition by regional governments of thepotential for a substantial increase in the participation by small businesses in thegeneration of regional income, employment, exports, investment and expandedeconomic growth. Advances in information and communications technology addcredence to this potential. In addition, developing economies are especially seeingsmall businesses as potential instruments for the alleviation of poverty and regionaldevelopment. While in developed economies the formation of horizontal and verticalclusters of small businesses can form the basis for internationally competitive regions,and this can be further enhanced through the construct of networks with similar smallbusinesses locally or internationally.This viewpoint was given further stimulus after the financial and economic crisis of1997-98, arising from which there has been a growing recognition of the need for theEast Asian economies to engage in comprehensive restructuring of their corporatesectors, with the objective of achieving transparency, improving corporate governanceand developing globally competitive enterprises. Small and medium enterprises(SME) can play a key role in the attainment of such objectives.This paper reviews the contribution of the SME sector to the growth and developmentof the East Asian economies, and their important contribution to economic growth,employment, trade and investment and the development of globally competitiveeconomies. In doing so identification of the potentially important role of SMEs infacilitating and bringing about the practical benefits of closer economic integration arealso emphasized. To enable this to occur it is important to identify within the EastAsian region: barriers to their development; key factors essential for their capacitybuilding; strategies to enhance their competitiveness in the global marketplace; keycomponents relating to their export success; and their role and importance infacilitating regional economic development, reducing income inequality, andempowering regional involvement in the global economy.