Daewoo moved into the construction business, helping to create the new village movement, that was a part of the rural development program in Korea. The company was also able to take advantage of the growing markets in the Middle East and within Africa. Daewoo was given its GTC designation at this time. Major investment help was offered by the government of South Korea to the company in the form of subsidized loans. The competing countries were angered by South Korea's strict import controls, but the government knew that, independently, the chaebols will never endure the world recession caused by the 1970's oil crisis. Protectionist policies were needed to make certain that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Samsung and Hyundai had better skill in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the biggest dockyard within the world, at Okpo. He said numerous 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 really successful corporation producing ships and oil rigs that are competitively priced on a tight production schedule. This took place in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government in this time was lessening its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to divest two of its textile companies 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 intended to make the chaebols more aggressive in their international dealings. Nevertheless, the new economic conditions caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into bankruptcy in the year 1985. The shift of government favour to small private companies was intended to spread the wealth that had previously been concentrated within Korea's industrial centers, Seoul and Pusan.