With few exceptions, every cell in a multicellular organism contains the same set of genes as every other cell. Despite this genetic equivalence, cells differ greatly in form, function, longevity, and many other characteristics. These differences are due to the differential expression of genes within each cell type. Thus, a nerve cell will express a certain subset of the entire genome, while a gut cell will express a different subset. (To express a gene means to use it to create its encoded product, usually a protein.) Cells become different from one another, therefore, by expressing different sets of genes. Thus, the problem of development can be addressed by understanding how initially identical cells come to express different sets of genes.
The beginning of the answer to this question lies in understanding gene transcription and transcription factors. Transcription is the process in which an enzyme called RNA polymerase binds to a gene to make an RNA copy; this is the first step in expressing the gene. Transcription factors are proteins that bind to regulatory regions of the gene, thereby influencing how easily RNA polymerase attaches to it. Different genes require different sets of transcription factors, and when these factors are in low supply, expression of that gene is slowed or stopped.
Since transcription factors are proteins, they are encoded by their own genes, which are regulated by yet other transcription factors. As we will see, many of the "master" genes that control development encode transcription factors that are expressed early in development. The sequential activation of these genes, in a domino-like fashion, is one way that the overall developmental program is carried out.
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