The course illustrates transformations and discusses challenges that local institutions and communities have experienced over recent decades. After a brief introduction on theoretical and methodological issues relevant for understanding of local governance, the structure and functions of local government institutions will be presented in a comparative perspective, focusing on various forms of equilibrium existing between center and periphery in different political systems. Subsequently, transformations of local governance arenas will be analysed, paying particular attention to the changing role of market actors and civil society in policy-making, and the challenges that such a process has brought about in terms of legitimacy, accountability, effectiveness and transparency. The last part of the course will focus on policies for regional and local development in the perspective of sustainability, showing how local and global policy arenas have become progressively interconnected and in what way local institutions and processes matter for facing challenges of sustainable development, climate change and other burning policy issues. During the last part of the course students will be actively involved in group work and discussions on a number of suggested issues.