It didn't. Yugoslavia under Tito was essentially propped by the West, especially by West Germany. Unemployment was a chronic problem and solved by the willingness of the West, again especially West Germany, to take in Yugoslavs as migrant workers. There were immense regional disparities, but on the whole Yugoslavia remained a poor country even after its allegedly high economic growth. Slovenian economic historian Neven Borak observed,

Yugoslavia was at the level of Turkey in terms of per capita gross domestic product at purchasing power parity in 1985. Kosovo, the less-developed part of Yugoslavia, was at the level of Pakistan. The most developed part, Slovenia, was compared with Spain and New Zealand. Vojvodina and Croatia approached Greece and Portugal. Bosnia-Herzegovina and Macedonia were compared with Thailand and Mexico, and Serbia with Turkey.

He further observed that while the Slovenian unemployment rate was 3.2%, Kosovo's was 38.4%. Unemployment was certainly higher in some areas than others, but was an overall problem as it averaged 14% between Republics throughout the 70s - this in spite of the generous migration policies provided by Western Europeans. This resulted in the creation of the phrase "socialist unemployment", which was seen as an oxymoron by economists of the day as other socialist economies did not have significant unemployment. This exceptional failure of Yugoslavia was due both to bad planning and a counterproductive ideology at the workplace level.

The blame for this is squarely on Tito's shoulders. In 1983, the incredibly prophetic CIA report, "Yugoslavia: An Approaching Crisis?", available through the CIA's FOIA library, stated that Tito, "defused regional rivalries by permitting foreign borrowing - without paying sufficient attention to improve high growth rates - to feed high growth rates which all regions shared". No productivity gain coupled with high growth rates seems to be a paradox, but on closer examination is only a paradox in the long run - and thus, in the long run, Yugoslavia suffered. With ready availability of foreign capital, one can increase a country's growth simply by continuously funneling foreign debt into spending projects, but eventually there comes a time to pay this off, at which point productivity is the key. Yugoslavia, for politcal reasons, embarked on an unsustainable growth policy from the beginning, which was aimed primarily at calming political tensions instead of creating a real economic miracle.

The report pithily stated that Yugoslavia had "the worst of both worlds" in terms of economic planning - anarchy at the top and stifling central control among regional authorities, who grew "isolated" from each other as the Federal Republics and not the Federation became the main economic decision maker. They built "redundant" industries without concern for profitability or economies of scale, as a result functioning as if they were several separate economies.

At the workplace management level, Titoism also provided the worst of both worlds. It left the capitalist mode of production essentially unchanged except by creating more regulations, and by giving control of workplaces to workers. These "reforms" in practice had firms operating in the same fashion as separate capitalist firms, but with a management that was beholden to the short-term living conditions of workers instead of to long-term productivity. Because "state owned" firms were still separate from one another and largely worker-managed, Yugoslavia didn't have the economies of scale of other socialist economies in Europe, who were able to mobilize all economic inputs behind a single economic plan, but also lacked the sustainable and profit-focused management culture of European capitalist countries.

In short, any "growth" that Tito generated was a result of foreign aid, migrant work, and unsustainable borrowing without concern for productivity increases to compliment these investments. The Yugoslav state was, from an economic perspective, institutionally incompetent at all levels, with the worst possible workplace management structure and the worst possible arrangement for economic planning at the Republic and Federal level. While Yugoslavia's "growth" was praised publicly by Western decision makers keen to win the country's favor, "Yugoslavia: An Approaching Crisis?" proves that the American government privately was well aware of Yugoslavia's economic realities for quite for a while, having compiled a number of data sets and factoids proving the unsustainability of the 60s and 70s economic policy. Sadly, even the temporary and false growth Tito generated didn't amount to much - by the 1980s, Yugoslavia was economically compared to Turkey, which until the economic boom of the late 1990s and 2000s was one of the poorest countries in the Middle East.

Sources:

"Yugoslavia: An Approaching Crisis?" CIA Library.

Petak, Zdravko. The Political Economy Background of Yugoslav Dissolution.

Brown, Michael. he role of economic factors in social crisis: The case of Yugoslavia.

Borak, Neven. Economic Background to National Conflicts in Yugoslavia.

Woodward, Susan L. Socialist Unemployment: The Political Economy of Yugoslavia, 1945-1990