The current pattern of industrial development in Arab settlements in Israel represents, above all, adaptation to restructuring processes operating throughout the Israeli economy. The result may be viewed as a form of peripheral industrialization of small plants specializing in less-advanced industrial production. The peripheralization process and the fact that Israeli Arab industry has remained marginal to the national economy should be understood in the context of the structural conditions in which Arab entrepreneurship is embedded. The impact of three forces is stressed: government policy, large corporations, and the internal sociocultural properties peculiar to the Arab population in Israel. The resulting form of industrialization is based on restructuring processes formatted as a number of distinctive development stages, which must be understood within the wider framework of Israel's economic restructuring. The dominant form of capitalist production affected the transformation of the Israeli Arab economy at each period, from state management to corporate dominance, and currently succeeded by a new accumulation regime affected by globalization processes. Furthermore, majority-minority relations affected it with each pole embedded in its own ethnic milieu. These majority-minority relations, supported by a selective government policy, have since been superseded by the relations conducted between the Jewish-dominated core and the Israeli-Arab-subordinated periphery. The result of this process has diversely affected both economic poles, and continues to influence the form of Arab industrialization, branch selection, and rate of plant openings. Furthermore, the result is a failure by Arab entrepreneurs to penetrate the more privileged sectors of the national economy, partly because of the failure of the Israeli political and economic elite to respond to Arab efforts at expansion into the larger economy.