Multi-level governance is widely used throughout the world, especially in more economically developed countries. In part, this is due to the presumed benefits of decentralization in terms of public-service delivery, and in part, it is due to a desire to disperse political power and governmental authority. Thus, 25 years ago, when major governmental reform initiatives were begun in many countries around the world, especially in Central and Eastern Europe and Latin America, much attention was devoted to establishing and/or strengthening local governments. This was the case in Bulgaria and Paraguay, two countries from different parts of the world, but similar in size, economic development and a history of highly centralized and authoritarian regimes. The purpose of this paper is to examine and better understand the processes of decentralization as they took place in those two countries and those factors which facilitated and/or hindered efforts to initiate effective local government.