Daewoo moved into the construction sector, helping to create the new village movement, that was a part of Korea's rural development program. The company was also able to capitalize on the growing markets in the Middle East and in Africa. Daewoo received its GTC designation during this time. The South Korean government provided major investment help to the corporation in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, independently, the chaebols will never survive the world recession caused by the 1970's oil crisis. Protectionist policies were needed to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Hyundai and Samsung had better knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He said a lot of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful corporation manufacturing oil rigs and ships which are competitively priced on a tight production schedule. This took place in the 1980s when the economy in South Korea was going through a liberalization stage.
The government throughout this time was reducing its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to divest two of its textile companies at this time and the shipbuilding industry was starting to attract more foreign competition. The objective of the government was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was meant to make the chaebols more aggressive in their international dealings. Nevertheless, the new economic conditions caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into liquidation during 1985. The shift of government favour to small private companies was meant to spread the wealth which had before been concentrated within Korea's industrial centers, Pusan and Seoul.