To base the prioritization of policies on all relevant information and to implement them inthe most effective way,reliance on the government alone is no longer sufficient.In theold model,government was seen as responsible for a stable macroeconomic and legalcontext and a functioning infrastructure while companies were to compete on the marketplace.The realities of modern competition are more complex:Government is animportant factor in shaping the business environment but so are companies,universities,and many other institutions.And government itself is not the unitary entity it appeared tobe when macroeconomic policies were the focus;at the microeconomic level manydifferent types of government agencies at all levels of geography have an impact.Effective cluster-based development needs to be based on an assessment of the mostcritical barriers that hold back productivity improvements and innovation.To identifythese most limiting factors,companies must be part of the policy process because it is attheir level that they have an affect.To act upon these findings,a broad group ofinstitutions will have to work together.Depending on the unique circumstances,allentities related to the cluster–from the government to individual companies to tradeassociations and universities with relevant research or educational programs–may haveto be involved.