The chapter offers an introduction to the relationship between social capital and local development processes in European rural areas. Focusing on the EU LEADER initiative, the chapter draws attention to how social factors of each territory influence socio-economic variables, thus explaining heterogeneity in socio-economic outcomes. The chapter highlights that despite the pressing social needs arising from the recent economic and financial crises, EU funding and decision-making bodies have not explicitly addressed and assessed the role of social dynamics and specifically of social capital, which still remain a black box.