Daewoo moved into the construction industry, helping to create the new village movement, which was a part of the rural development program in Korea. The company was also able to take advantage of the emergent markets within the Middle East and in Africa. Daewoo was given its GTC designation during this time. Major investment support was offered by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, without help, the chaebols will never survive the world recession caused by the 1970's oil crisis. Protectionist policies were required to ensure 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 better skill in heavy engineering and was more suitable to shipbuilding than Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty rather than profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really profitable company producing competitively priced oil rigs and ships on a tight production timetable. This happened in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government during this time was reducing its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to rid two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. The goal of the government was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their global dealings. However, the new economic climate caused some chaebols to fail. The Kukje Group, amongst Daewoo's competitors, went into bankruptcy in the year 1985. The shift of government favour to small private companies was intended to spread the wealth which had previously been concentrated within Pusan and Seoul, Korea's industrial centers.