Daewoo moved into the construction sector, helping to create the new village movement, that was a part of the rural development program in Korea. The corporation was also able to take advantage of the growing markets in the Middle East and within Africa. Daewoo received its GTC designation during this time. Major investment assistance was offered by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, unaided, the chaebols would never endure the global recession caused by the oil crisis during the 1970s. Protectionist policies were necessary to make sure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that both Samsung and Hyundai had better knowledge in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard in the world, at Okpo. He stated many times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty instead of revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable corporation producing ships and oil rigs that are competitively priced on a tight production schedule. This happened during the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures which helped to fuel the rise of small companies and medium-sized companies. Daewoo had to divest two of its textile companies at this time and the shipbuilding industry was beginning 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. Nevertheless, the new economic climate caused some chaebols to fail. One of the competitors of Daewoo, the Kukje Group, went into liquidation in the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had previously been concentrated in Seoul and Pusan, Korea's industrial centers.