This graduation thesis is exploring the process of association of enterprises and companies into the form of clusters in order to improve business efficiency and market competitiveness. This method of joining companies contributes not only to a more balanced regional development of the economy, but also represents a key for overall economic development in the future. Linking education, science and production is a necessary condition for economic development and these issues are encouraging innovation processes. Adoption of new technologies, creating new jobs and markets without the support of institutions is difficult to achieve. Therefore, the role of the state for clustering processes is crucial. The European Union policy puts activities focused on innovation, the establishment of small and medium-sized enterprises and networking, especially in terms of a cluster development. In a time of economic crisis, Croatian institutions should support clustering processes to improve the competitiveness and overall economic development. The paperwork explains examples of the experiences of some European countries in the formation of clusters. Specific impacts associated with the formation of clusters in the EU can be summarized in a few advantages: significantly increased industrial production in the country, positive restructuring of the industry, development of small and medium-sized enterprises, increased competitiveness of industry, increased exports. Therefore, it is possible to revive the traditionally underdeveloped regions and to create the possibility of integration with other clusters in more developed regions. This paperwork also defines further suggestions of Croatian economic development with an emphasis on the further processes of clustering and practical applications in order to increase the competitiveness of the Croatian economy. All of these issues are given as a task in this research mission.