Before World War II, Yugoslavia was predominantly an agrarian country. It had fertile soils and significant reserves of minerals, including non-ferrous metals. Agriculture yielded more than 80% of the national income, and the rural population was over 85%. Much of the industry was engaged in processing of agricultural products. In the 1930s, industry began to rise, mainly due to the development of mining, non-ferrous metallurgy and timber industry. The textile industry was also developing. The country was characterized by a significant gap in the economic development of its regions. More intensive agriculture and comparatively developed industry existed in Slovenia, Vojvodina, Croatia and Serbia. The economy of Montenegro, Macedonia, and Bosnia and Herzegovina was less developed.

After 1945 Yugoslavia became a developed industrial-agrarian state. The total public product in 1978 increased by 6.4 times in comparison with 1947, and per capita – 4.8 times. The vast majority of industrial production was nationalized (in the late 1970s the public sector generated 86% of GDP). In contrast to the Soviet-type economy, the Yugoslav economy was based on the so-called “self-government”: Production units enjoyed economic autonomy and competed with each other, while a part of profits was transferred to the state.

As a result of industrialization, mechanical engineering, metallurgy, automotive, electrical engineering, radio-electronic, oil and other industries were essentially created anew. The share of industry in the creation of the total social product increased from 18% in 1947 to 39% in 1978, and the share of agriculture declined from 40% to 14%.

In the 1980s the crisis phenomena began to grow in the economy of Yugoslavia – reduction of growth of labor productivity, strengthening of disproportions in the level of development of different republics and regions, deficit of foreign trade balance and growth of unemployment. According to official data, the total external debt of the country in 1989 was about 19 billion U.S. dollars. INFLATION EXCEEDED 2,500%. Inflation exceeded 2500%. Real incomes of the population decreased by 7% in 1987, and by another 10% in 1988.