The government of South Korea in the early part of the 1960s began a new economic strategy that required large corporations called "chaebols" to focus on manufacturing exports. This new plan called for a series of five year plans which were intended to lessen the trade deficit the nation was experiencing while helping to bolster the country's production. This was a strategy that had already been successfully utilized by Hong Kong and Taiwan, the Far East competitors of South Korea. Daewoo had a key part in this effort to boost the significance of South Korea's exports.
The government of South Korea sponsored cheap loans for chaebols producing 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. The corporation Daewoo took advantage of the huge workforce of the country, its primary asset. By concentrating on labour-intensive businesses, such as textile and clothing, the company yielded high earnings. The factory of the company in Pusan produced 3.6 million shirts on a monthly basis. Also, the company manufactured basic manufacturing machinery, that were labour intensive as well. Throughout this time, Daewoo helped to increase the level of exports of South Korea, that were growing nearly 40% per year.
Once the demand for labour pushed wages up, the comparative advantage in labor-intensive production in Korea started to decline. Competition from both malasya and Thailand forced Korea to refocus its energies on other businesses, such as petrochemicals, shipbuilding, electrical and mechanical engineering, and construction. This specific phase of the country's economic recovery lasted from the year 1973 to the year 1981. This occurred at the same time as the United States announced its plans to completely withdraw its peacekeeping forces from the country. The new emphasis in production was intended to further expand Korea's exports while simultaneously making components that had to be imported before. Domestic components production helped to strengthen domestic businesses and make possible a national defense industry.