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Rapid industrialization and diversification occurred after World War II. Decentralization came in 1965, allowing growth of certain sectors, like the tourist industry. Profits from Croatian industry were used to develop poorer regions in the former Yugoslavia. This, coupled with austerity programs and hyperinflation in the 1980s, led to discontent in both Croatia and Slovenia that fueled the independence movement.

The Republic of Croatia (Croatian: Republika Hrvatska) is a parliamentary democracy with an elected president. It adopted its current constitution on December 22, 1990, and declared independence from Yugoslavia on June 25, 1991.

Croatia has a three-tiered judicial system, consisting of the Supreme Court, county courts, and municipal courts. The Constitutional Court rules on matters regarding the Constitution.

With the fall of the Venetian Republic in 1797, its possessions in eastern Adriatic mostly came under the authority of France which passed its rights to Austria the same year. Eight years later they were restored to France as the Illyrian provinces, but won back to the Austrian crown by 1815. Though now part of the same empire, Dalmatia and Istria were part of Cisleithania while Croatia and Slavonia were under Hungary.

The Lombards and the Huns made an incursion from the north. After 476 the area was subject to Odoacer and then to Ostrogoth rulers beginning with Theodoric the Great. Justinian claimed the old province of Dalmatia to the Eastern Roman Empire in 535. Forebears of Croatia's current Slav population settled there in the 7th century following the Avars, partly under instructions from Byzantine emperor Heraclius.

In the middle Paleolithic period, Neandertals lived in modern Zagorje, northern Croatia. Dragutin Gorjanovic-Kramberger discovered bones and other remnants of a Neandertal, subsequently named Homo krapiniensis, on a hill near the town of Krapina.

In the 4th century BC the northern parts of modern-day Croatia were also colonized by the Celts, the Scordisci tribe. Other Celtic peoples may also have been found elsewhere integrated among the Illyrians. The islands of Issa and Pharos as well as the locality of Tragurion became Greek colonies since the same period.

The record of archdeacon Thomas, as well as the Chronicle of the Priest of Duklja from the 12th century, state that the Croats did not arrive the same way that the Byzantine texts say. Instead, these works claim that the Croats were a group of Slavs that remained after the Goths (under a leader referred to as "Totila") had occupied and pillaged the Roman province of Dalmatia. The Chronicle of Dioclea, on the other hand, speaks of a Gothic invasion (under a leader referred to as "Svevlad", followed by his descendants "Selimir" and "Ostroilo") after which the Slavs merely took over.

After the Battle of Sisak in 1593, when the Ottoman army was successfully repelled for the first time on the territory of Croatia, the lost territory was mostly restored, except for large parts of today's Bosnia and Herzegovina. By the 1700s, the Ottoman Empire was driven out of Hungary and Croatia, and Austria brought the empire under central control.

Any negative trends in the large EU economies such as Germany or Italy also have a negative impact on Croatia as they are its biggest trade partners.

The Croatian economy is post-communist. In the late 1980s, at the beginning of the process of economic transition, its position was favourable, but it was gravely impacted by de-industrialization and war damages.