THIS PAPER DISCUSSES THE KEY ISSUES ASSOCIATED WITH THE FORGING OF EFFECTIVE INTERACTIONS BETWEEN THE THREE BROAD INSTITUTIONAL ACTORS, NAMELY INDUSTRY, GOVERNMENT, AND HIGHER EDUCATION. A REVIEW AND DESCRIPTIVE MODEL OF THE CONTEMPORARY DEVELOPMENTS AND CHALLENGES IN THE U.S. ECONOMIC SYSTEM IS PRESENTED. EMPIRICAL MODELS OF INDIVIDUAL AND ORGANIZATIONAL INTERACTIONS ARE DISCUSSED USING BOTH THE MICROSCOPIC AND MACROSCOPIC MODELS. THESE EXPLAIN: THE BEHAVIOR OF ORGANIZATIONS AND THE INDIVIDUALS THAT COMPOSE THEM; AND THE NATURE OF THE INTERACTIONS THAT EMANATE FROM COOPERATING ORGANIZATIONS. THE WORK STRONGLY INDICATES THAT INSTITUTIONAL INTERACTIONS WILL BECOME INCREASINGLY IMPORTANT IN THE FUTURE FOR SUSTAINING THE VITALITY OF MANUFACTURING ENGINEERING AND ALL SECTORS OF THE U.S. ECONOMY. THE DETERMINANTS OF SUCCESSFUL INTERACTIONS ALONG WITH THE RESULTING BENEFITS ARE PRESENTED, SUP