The role of local interactions in protein folding has recently been the subject of some controversy. Here we investigate an extension of Zwanzig's simple and general model of folding in which local and nonlocal interactions are represented by functions of single and multiple conformational degrees of freedom, respectively. The kinetics and thermodynamics of folding are studied for a series of energy functions in which the energy of the native structure is fixed, but the relative contributions of local and nonlocal interactions to this energy are varied over a broad range. For funnel shaped energy landscapes, we find that 1) the rate of folding increases, but the stability of the folded state decreases, as the contribution of local interactions to the energy of the native structure increases, and 2) the amount of native structure in the unfolded state and the transition state vary considerably with the local interaction strength. Simple exponential kinetics and a well-defined free energy barrier separating folded and unfolded states are observed when nonlocal interactions make an appreciable contribution to the energy of the native structure; in such cases a transition state theory type approximation yields reasonably accurate estimates of the folding rate. Bumps in the folding funnel near the native state, which could result from desolvation effects, side chain freezing, or the breaking of nonnative contacts, significantly alter the dependence of the folding rate on the local interaction strength: the rate of folding decreases when the local interaction strength is increased beyond a certain point. A survey of the distribution of strong contacts in the protein structure database suggests that evolutionary optimization has involved both kinetics and thermodynamics: strong contacts are enriched at both very short and very long sequence separations.