Early History
The government of South Korea in the early 1960s began a new economic strategy which required large corporations called "chaebols" to concentrate on producing exports. This new strategy called for a series of five year plans which 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 y both the Far East competitors of South Korea, Hong Kong and Taiwan. The corporation Daewoo had a significant part in this effort to enhance the significance of South Korea's exports.
To help the chaebols in their efforts for production of exports, the South Korean government sponsored cheap loans for chaebols. Daewoo was among these companies that benefited during 1967. This was at the beginning of the second five-year plan. The company Daewoo took advantage of the nation's huge workforce, its primary asset. By focusing on labour-intensive industries, like for instance clothing and textile, the company yielded high earnings. The factory of the corporation within Pusan produced 3.6 million shirts on a monthly basis. Also, the company made simple manufacturing machines, which were labour intensive as well. In this time, the corporation Daewoo helped to boost South Korea's level of exports, that were growing almost 40 percent per year.
Once the demand for labour pushed wages up, the comparative advantage in labor-intensive production in Korea began to decline. Competition from both malasya and Thailand forced Korea to refocus its energies on other industries, like petrochemicals, shipbuilding, electrical and mechanical engineering, and construction. This phase of Korea's economic recovery lasted from 1973 to nineteen eighty one. This took place at the same time as the United States announced its plans to totally withdraw its peacekeeping forces from the nation. The new emphasis in manufacturing was meant to further expand Korea's exports while at the same time producing parts that previously had to be imported. Domestic parts production helped to make possible a national defense industry and strengthen domestic businesses.