Since independence, the foreign investment climate has steadily improved in Slovenia, despite constraints that have inhibited investment. The small domestic economy has been viewed by many prospective investors as the least risky of the former Yugoslav republics, but to date Slovenia's share of world foreign direct investment (FDI) flows as been well below its share of world GDP. From 1988 to 1990, its share of world FDI was 60% of its share of world GDP, and from 1998 to 2000, it was only 30% of its share of world GDP.
Until the late 1990s Slovenia retained several barriers to foreign investment. Any company incorporated in Slovenia was required to have a majority of Slovenes on its board of directors, or a managing director or proxy of Slovene nationality. Foreign companies and individuals of foreign nationality were prohibited from owning land in Slovenia. However, any company incorporated in Slovenia was permitted to purchase real estate, regardless of the origin of its founding capital. Liberalization laws enacted in 1999 lowered the threshold of foreign direct investment from 50% to 10%. This allowed more foreign investors to avert the custody account regime.
FDI inflow amounted to $375.2 million in 1997, but fell to about $250 million in 1998. In 1999 and 2000, FDI inflows averaged close to $180 million. In 2001, contrary to the trend toward the decline of foreign investment worldwide, FDI inflow into Slovenia rose to a record $442 million.