I was recently in Croatia and found it to be almost caught up, in terms of development, to Western Europe – far more than Russia or other former Soviet/Eastern Bloc countries. Was this all because of progress made in the last 20 years, or was Yugoslavia already significantly ahead of the USSR?
Well, on a scale between the USSR (and it's satelites) and Western Europe it was somewhere in between. It's strategic position just outside of the Iron curtain and non-affiliation with the USSR made Yugoslavia very interesting to the US which gave it billions in aid. Later on, when Yugoslavia eased up on it's emigration policies, a lot of people emigrated to Western Europe (mainly W.Germany and Switzerland), US/Canada and Australia/NZ. They sent money to their families back home which boosted 'domestic' income and thus Yugoslavia's GDP.
However, Yugoslavia's (like all of the Eastern bloc's) economic system and policies were unsustainable and began to crumble in the late '80s and were arguably, among other political/nationalistic reasons, one of the reasons of Yugoslavia's fall.