Local governance is a broad concept and is defined as the formulation and execution of collective action at the local level. The purpose of local government is to ensure effective and efficient use of public resources and service delivery at the level closest to citizens. Regional development is a new concept that aims to stimulate and diversify the economic activity of a country (region), to encourage investment in the private sector, to create a new jobs vacancy and improves living standards of the country. Regional development policies are a number of measures designed and promoted by the central and local administration, but the cooperation undertaken at the actors are in a different one, which included the private sector and civil society. At the center of these regional policies or practices is the use of efficient potential of each region, being particularly focused on business, means   promoting the development of the new enterprises, promoting labor market and investment, improve the quality of environment, health , education and culture. Traditional objective of regional development policies is the reduction of territorial disparities for achieving a relative balance between economic and social levels of development in different areas in the national territory. Regional development is the actual task of local government units in Albania, and is one of the tasks and challenges of the future. Currently it takes a special importance in the context of European Union integration. Reforms have begun to change the system in 1990 in order to implement local democracy and decentralization principles that are present today. Inequalities that exist within the region and between them indicate that in some regions the economic potential is not being fully utilized, and that it reduces the overall performance in national level. Demographic changes, economic and social policies make these changes be constantly subject to reflect concrete reality. Regional economics has a long tradition in analytical research and policy modeling, with the aim to enhance our understanding of regional competitiveness conditions and of the emergence, persistence, and mitigation of spatial socio-economic disparities. Unequal regional development in our open economy has prompted a long-lasting debate on the validity and usefulness of economic growth theories in a regional context. The focus of the paper is to show the contribution of classical, neoclassical and modern regional development theories and to do the comparative analyze of the regional development models. The questions addressed are: Which is the perception of regional development and the impact of classical and modern theories of regional development? Could Albania to have a regional development model to achieve cohesion and spatial use of competitive priorities for sustainable development? If we achieve these two objectives, will occur in the same time or one after another? What will be the effects on the economy, territory and governance?

Keywords: competitiveness, regional development models, regional disparities, classic and   neoclassic theories.

JEL   Classification:  R500, R580