This article examines how local government operated in two villages in nort
hern Albania and describes how these two communities organized themselves t
o negotiate with the state. Post-communist local government is examined by
means of its functions as a provider and an organizer. The reluctance of ce
ntral government to devolve power was reflected in the resources allocated
to local government institutions and thus on their performance. While Alban
ian cultural traditions were a source of support and cohesion in,the villag
es, they were no substitute for the development of the capacity to collecti
vely negotiate with the state. There was a link between the way in which in
stitutions were socially embedded and the capacity of the villages to form
and support representative bodies. The article concludes that local governm
ent has been undervalued and argues for greater attention to be focused on
the nexus composed of citizens and the institutions of government which are
closest to them. Copyright (C) 2000 John Wiley & Sons, Ltd.