Daewoo moved into the construction sector, helping to create the new village movement, which was a part of Korea's rural development program. The corporation was also able to capitalize on the growing markets within the Middle East and in Africa. Daewoo was given its GTC designation at this time. The South Korean government offered major investment support 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 though Kim felt that Samsung and Hyundai had greater knowledge in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard within the world, at Okpo. He stated lots of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than revenue. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation producing competitively priced oil rigs and ships on a tight production timetable. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
The government throughout this time was lessening its protectionist measures that helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to rid two of its textile companies at this time and the shipbuilding industry was starting to attract more foreign competition. 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 worldwide dealings. Then again, the new economic climate caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into bankruptcy in the year 1985. The shift of government favour to small private companies was meant to spread the wealth which had before been concentrated in Korea's industrial centers, Pusan and Seoul.