The electrical, magnetic, and optical properties of materials are controlled by their composition and structure. In turn, the structure and structure related physical properties of these materials are determined by the chemical bonding between the atoms. Local chemistry controls global physical properties and at the root of all bonding are the valence electrons. Material-specific electronic structure theory is being used to understand the electronic properties of materials in microscopic terms, The theoretical study of electronic structure involves extensive computational effort, particularly for the complex materials of interest. The understanding thus gained has often proved essential for the optimization of known and the search for new materials. A quantitative, predictive electronic-structure theory has been developed during the last 50 years, with the cornerstones being the advent of computers, efficient methods for solving Schrodinger's equation, and density-functional theory (DFT). Whereas density-functional theory, as currently applied, suffices for describing the structure and properties of conventional materials, such as conventional metals and superconductors, further theoretical developments are needed to describe emerging materials, which often contain so called correlated electrons. Such electrons are for instance responsible for high-temperature superconductivity and certain types of metal-insulator- and magnetic transitions. Quantitative description of correlated electron systems should enable the design of materials whose properties may be changed drastically by external means, for instance. The second category of materials that need special attention is that of materials at nanoscale. The quantum confinement effect changes the electronic behavior drastically. In particular, electronic structure of oxide materials, semiconductors, materials with novel properties like multiferroicity, CMR effect, spintronics properties both in bulk and nanoscale are in focus of our attention.