Daewoo moved into the construction business, helping to make the new village movement, that was a part of the rural development program in Korea. The corporation was also able to capitalize on the growing markets in the Middle East and in Africa. Daewoo received its GTC designation at this time. Major investment assistance was provided by the South Korean government to the company in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, unaided, the chaebols will never endure the global recession caused by the 1970's oil crisis. Protectionist policies were essential 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 better expertise in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the biggest dockyard in the world, at Okpo. He said numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than revenue. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable corporation making competitively priced oil rigs and ships on a tight production schedule. This happened in the 1980s when the economy in South Korea was going through a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized companies. Daewoo was forced to divest two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. The government's goal was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was intended to make the chaebols more aggressive in their worldwide dealings. However, the new economic climate caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into liquidation during 1985. The shift of government favour to small private businesses was intended to spread the wealth which had before been concentrated within Pusan and Seoul, Korea's industrial centers.