The government of South Korea in the early part of the 1960s began a new economic strategy which required huge corporations referred to as "chaebols" to focus on manufacturing exports. This new strategy called for a series of five year plans that were designed to decrease the trade deficit the nation was experiencing while helping to bolster the nation's production. This was a strategy that had already been utilized successfully by Hong Kong and Taiwan, the Far East competitors of South Korea. The company Daewoo had a key part in this effort to improve the significance of South Korea's exports.
To assist the chaebols in their efforts for production of exports, the government of South Korea sponsored cheap loans for chaebols. Daewoo was amongst these companies that benefited in 1967. This was at the start of the second five-year plan. The company Daewoo capitalized on the large labor force of the nation, its primary asset. By focusing on labour-intensive businesses, such as clothing and textile, the business generated high earnings. The factory of the company within Pusan made 3.6 million shirts on a monthly basis. The corporation also manufactured simple manufacturing machines, which were labour intensive as well. During this time, Daewoo helped to boost South Korea's level of exports, that were growing almost 40 percent per year.
Korea's comparative advantage in labor-intensive production started to decline, once the demand for labour pushed the wages upwards. Malaysia and Thailand became market competitors to South Korea, which forced the country to focus on the businesses of shipbuilding, petrochemicals, mechanical and electrical engineering, and construction. This specific phase of the nation's economic recovery lasted from the year 1973 to 1981. This occurred at the same time as the US announced its plans to totally withdraw its peacekeeping forces from the country. The new emphasis in manufacturing was meant to further expand Korea's exports while simultaneously making parts that had to be imported previously. Local parts manufacturing helped to strengthen domestic industries and make possible a national defense industry.