This article deals with the relationship between economic regulation and interes-group representation at the regional level in advanced capitalist societies. The importance of an ‘intermediate government’ of economic development at the regional level has increased in recent years within such societies as a result of the crisis of the Keynesian wlfare state and the decline of Fordism. At the same time, however, the growing need for regional regulation does not necessarily call into being an explicit demand for and supply of efficient regional government within the existing institutional framework. This ‘paradox fo the region’ is explored int he context of the Italian case, characterized by strong local but weak regional identities organizations of business and labour for an effective intermediate government of the economy, an proposes a strategy for reinforcing such organizatons at this level through the reform of regional government administration and the supervised delegation of public powers to them.