Daewoo moved into the construction industry, helping to make the new village movement, which was a part of the rural development program in Korea. The company was also able to capitalize on the growing markets within the Middle East and in Africa. Daewoo received its GTC designation at this time. Major investment help was offered by the government of South Korea to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, without help, the chaebols will never endure the world recession caused by the 1970's oil crisis. Protectionist policies were required to make sure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Hyundai and Samsung had greater expertise in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard within the world, at Okpo. He said many times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility instead of revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really profitable corporation making competitively priced oil rigs and ships on a tight production schedule. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized businesses. Daewoo was forced to divest two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from overseas. The goal 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 global dealings. Then again, the new economic climate caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into bankruptcy during 1985. The shift of government favour to small private businesses was intended to spread the wealth which had before been concentrated in Seoul and Pusan, Korea's industrial centers.