Daewoo moved into the construction business, helping to make the new village movement, that was a part of Korea's rural development program. The company was also able to capitalize on the emergent markets in the Middle East and in Africa. Daewoo received its GTC designation during this time. Major investment support was provided by the South Korean government to the corporation in the form of subsidized loans. The strict import controls of South Korea angered competing countries, but the government knew that, unaided, the chaebols would never endure 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 greater expertise in heavy engineering and was more suitable to shipbuilding than Daewoo. Kim did not want to take responsibility for the biggest dockyard in the world, at Okpo. He said lots of times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty rather than earnings. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation making competitively priced ships and oil rigs on a tight production schedule. This happened during the 1980s when the economy within South Korea was experiencing a liberalization stage.
The government throughout this time was lessening 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 beginning 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. Nonetheless, the new economic conditions caused some chaebols to fail. Among Daewoo's competitors, the Kukje Group, went into liquidation in 1985. The shift of government favour to small private businesses was meant to spread the wealth which had before been concentrated in Korea's industrial centers, Pusan and Seoul.