A framework for the input-output analysis, model reduction and control design of spatially developing shear flows is presented using the Blasius boundary-layer flow as an example. An input-output formulation of the governing equations yields a flexible formulation for treating stability problems and for developing control strategies that optimize given objectives. Model reduction plays an important role in this process since the dynamical systems that describe most flows are discretized partial differential equations with a very large number of degrees of freedom. Moreover, as system theoretical tools, such as controllability, observability and balancing has become computationally tractable for large-scale systems, a systematic approach to model reduction is presented.