Local governments are the basis of a political system. People’s lives are directly shaped by the decisions of local politicians and good local governance can improve the living conditions significantly. But local governance faces many challenges nowadays, such as demographic changes, fiscal burdens, and rising international competition for investments and jobs. Not only since the debt crisis started has the fiscal scope of many European municipalities been limited. In Asia local governance is often hindered by strong elites, low degree of decentralization, a lack of democratic development or violent insurgencies. At the same time, people develop a desire to be more actively involved in politics. The articles provide an overview of the challenges faced by various Asian and European countries and demonstrate possible reactions to these issues.