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This study explores local European communities' efforts to respond to the challenges posed by the global economy. Significantly, the European Union (EU) has implemented a policy, known as the regional cohesion Objective Two Structural Funds, targeting communities that have experienced economic shocks such as deindustrialization. The EU's commitment to such a significant policy directed at sub-national governing units reflects a theoretical shift in political science and economic geography that is often referred to as the "new regionalism."This study adopts a research strategy that has been successfully applied in studying local economic development policy in the United States, the "Gateway Community Project" (http://www.chsbs.cmich.edu/Political%5FScience/gateways/). Interviews with local regional and national elected and non-elected administrators in Italy and Luxembourg examining the following questions were accomplished in March and April, 2006: What role do intergovernmental accords, including bilateral and multilateral international treaties as well as local and national power-sharing, play in formulating and implementing local economic development policies? Are communities that have undertaken international solutions to local economic challenges better able to cope with changes to their local economies? To what extent are local public-private partnerships utilized in finding solutions to local economic challenges?Preliminary findings indicate that local economic development strategies still largely remain under national control. On the other hand, communities that have undertaken European programs have benefited from increases in human-capital among local administrative staff. Finally, despite efforts to promote public-private partnerships at the local level, these agreements have been limited by the lack of necessary legislation at the national level. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]