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In order to fully understand the process of European integration it is of paramount importance to consider developments at the sub-national and local level. EU integration scholars shifted their attention to the local level only at the beginning of the 1990s with the concept of multi-level governance (MLG). While MLG is the first concept to scrutinise the position of local levels of public administration and other actors within the EU polity, I perceive it as too optimistic in the degree of influence it ascribes to local levels. Thus, learning from and combining MLG with other concepts, such as structural constructivism, helps to reveal some of the hidden aspects of EU integration and paint a more realistic picture of multi-level interaction. This thesis also answers the call for more case studies in order to conceptualise MLG further. After a critical study of theories and concepts of European integration, above all, MLG, I will analyse sub-national and local government in Finland and Germany. I show how the sub-national level and local governments are embedded in the EU s multi-level structure of governance and how, through EU integration, those levels have been empowered but also how their scope of action has partially decreased. After theoretical and institutional contextualisation, I present the results of my empirical study of the EU s Community Initiative LEADER+. LEADER stands for Liaison Entre Actions de Développement de l'Économie Rurale , and aims at improving the economic conditions in Europe s rural areas. I was interested in how different actors construct and shape EU financed rural development, especially in how local actors organised in so-called local action groups (LAGs) cooperate with other administrative units within the LEADER+ administrative chain. I also examined intra-institutional relations within those groups, in order to find out who are the most influential and powerful actors within them. Empirical data on the Finnish and German LAGs was first gathered through a survey, which was then supplemented and completed by interviewing LAG members, LAG-managers, several civil servants from Finnish and German decision-making and managing authorities and a civil servant from the EU Commission. My main argument is that in both Germany and Finland, the Community Initiative LEADER+ offered a space for multi-level interaction and local-level involvement, a space that on the one hand consists of highly motivated people actively contributing to the improvement of the quality of life and economy in Europe s countryside but which is dependent and also restricted by national administrative practices, implementation approaches and cultures on the other. In Finland, the principle of tri-partition (kolmikantaperiaatte) in organising the executive committees of LAGs is very noticeable. In comparison to Germany, for instance, the representation of public administration in those committees is much more limited due to this principle. Furthermore, the mobilisation of local residents and the bringing together of actors from the local area with different social and institutional backgrounds to become an active part of LEADER+ was more successful in Finland than in Germany. Tri-partition as applied in Finland should serve as a model for similar policies in other EU member states. EU integration changed the formal and informal inter-institutional relations linking the different levels of government. The third sector including non-governmental institutions and interest groups gained access to policy-making processes and increasingly interact with government institutions at all levels of public administration. These developments do not necessarily result in the empowering of the local level.