Five years after the return to peace, Croatia is now faced with a number of critical challenges: creating new employment opportunities in local communities, towns and cities for school leavers, young adults, returned refugees and displaced persons; achieving the framework conditions for eventual integration into the European Union and, finally, the challenge of competing and establishing a niche for Croatian products in the global market place. Given the country's recent history, the International Labour Organization (ILO) recognizes that Croatia's long-term success in meeting these challenges will ultimately depend on nurturing models of enterprise and economic decision-making that are conducive to socially sustainable development. In line with the European Union's stated goals of economic and social cohesion, existing resources and assets must be managed by, and made to work in favour of, local stakeholders in ways that not only generate wealth, but also preserve a good living environment and foster harmony within local communities. The promotion of a Local Economic Development (LED) Process in Croatia has been a positive step in this direction. This study highlights some of the successes encountered in the implementation of LED initiatives against the backdrop of Croatia's national development goals and targets. It is hoped that the issues presented will provide inspiration to any governments thinking about, or having already established, similar structures in their own countries.