ABSTRACT
The internationalization of Slovenian firms cannot be understood without knowing at least briefly how and when the Slovenian economy's internationalization actually started. The most important issue to be addressed involves the answer to the question why outward foreign direct investment (FDI) in Slovenia started before inward FDI. This would suggest that the investment development path model is not valid in Slovenia. Outward FDI increasingly became an instrument of export promotion since chronic shortages of foreign exchange increasingly characterized the economy of former Yugoslavia, based on an import-substitution development strategy. Outward FDI in the Yugoslav case was, therefore, to a great extent a system escape operation and did not follow a 'normal' investment development path which starts with inward and only later with outward FDI. Since late 1950 when Slovenian firms first began investing abroad, there have been a lot of changes which have radically changed the environment and, thus, also the determinants and motivation for outward FDI.
