Daewoo moved into the construction industry, helping to create 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 within the Middle East and within Africa. Daewoo was given its GTC designation during this time. The South Korean government offered major investment assistance to the company in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, unaided, the chaebols would never survive the world recession caused by the oil crisis during the 1970s. 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 both Samsung and Hyundai had greater knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He said lots of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than earnings. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation producing competitively priced ships and oil rigs on a tight production schedule. This took place during the 1980s when South Korea's economy was experiencing a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized companies. Daewoo was forced to rid two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from abroad. The government's objective was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their global dealings. However, the new economic climate caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into bankruptcy during the year 1985. The shift of government favour to small private businesses was intended to spread the wealth that had previously been concentrated in Pusan and Seoul, Korea's industrial centers.