The South Korean government in the early 1960s began a new economic strategy which required large companies called "chaebols" to focus on producing exports. This new strategy called for a series of five year plans that were intended to lessen the trade deficit the nation was going through while helping to bolster the nation's production. This was a plan that had already been successfully used by Hong Kong and Taiwan, the Far East competitors of South Korea. The company Daewoo had a significant part in this effort to improve the importance of South Korea's exports.
The government of South Korea sponsored cheap loans for chaebols manufacturing goods for export. Daewoo benefited from the loans when it began trading during 1967. This was at the beginning of the second five-year plan. Daewoo took advantage of the nation's large workforce, its primary asset. By focusing on labour-intensive businesses, such as clothing and textile, the company yielded high profits. The company's factory within Pusan made 3.6 million shirts on a monthly basis. The corporation also manufactured basic manufacturing machines, that were also labour intensive. In this time, Daewoo helped to increase South Korea's level of exports, that were growing nearly 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 industries of shipbuilding, petrochemicals, electrical and mechanical engineering, and construction. This specific phase of the nation's economic recovery lasted from 1973 to 1981. This happened at the same time as the United States announced its plans to totally withdraw its peacekeeping forces from the country. The new emphasis in manufacturing was meant to further the expansion of Korea's exports while simultaneously manufacturing parts which had to be imported previously. Domestic components production helped to make possible a national defense industry and strengthen domestic industries.