The economic and industrial underdevelopment in the Socialist Federal Republic of Yugoslavia (SFRY) during the post-World War II period resulted in the partial abandonment of the Soviet economic model and the introduction of free market elements. The social concept of self-management and the 1965 economic reform enabled enterprise entities, still owned by the state, to allocate and distribute finances. From the 1950s, SFRY witnessed a fast growth in the economy and industrial production, and the emergence of design. However, most enterprises in former Yugoslavia had little interest in investing in design, even though the material means were available. Through the process of privatization from 1990 on, and upon the introduction of the free enterprise economy social model, this persistent resistance to achieve value-added products by implementing design strategy was eventually one of the reasons for both the economic troubles in the transformation process and the final decay of state-owned companies. Throughout the 1990s, the privatized companies in the newly independent state of Croatia inherited this non-innovative approach to industrial production while focusing more on license buying.

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