The notion that institutional capacity matters to regional economic performance has grown in recent years (Evans and Harding, 1997; Gibbs, 2001; Healey, 1997). However, little work has focused on issues surrounding the impact of institutional capacity on major (sub) regional investment programmes such as that afforded through Objective 1 designation. Research has been undertaken into the notion of'social capital' (Putnam, 1993) and enhancing the role of local government (Osborne and Gaebler, 1992). A body of work has explored regeneration networks and partnerships (Rhodes, 1997; Skelcher et al, 1996). Less has been undertaken on developing a framework through which to define and examine institutional capacity, exploring institutional capacity across a range of stakeholders, in sub regions subject to additional funding, and through time. This thesis attempts to help fill the gap that exists in the current literature. The research proposal is designed to develop a methodology through which to define and explore the notion of institutional capacity at the sub regional level; to undertake longitudinal research through which to assess the evolving nature of capacity in the region; to examine existing theories of governance and their relevance to institutional capacity within the context of a programme such as Objective 1; to provide a theoretical explanation of institutional capacity; and to assist in the creation of a sustainable and inclusive approach towards the regeneration of South Yorkshire within the context of Objective 1. This thesis undertakes this task by the use of semi-structured interviews and case studies in exploring the development of institutional capacity in the South Yorkshire Objective 1 Programme. The thesis explores the usefulness of four theories associated with notions of Governance and Power and argues that the development of institutional capacity in the South Yorkshire Objective 1 Programme is best explained by synthesising across these approaches and formulating a new approach defined as 'Bureaucratic Multi-level Governance'.