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 corporation was also able to capitalize on the emergent markets in the Middle East and in Africa. Daewoo received its GTC designation during this time. Major investment support was provided by the government of South Korea to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, independently, the chaebols will never endure the global recession caused by the 1970's oil crisis. Protectionist policies were necessary 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 better expertise 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 many times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than earnings. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really profitable corporation manufacturing oil rigs and ships that are competitively priced on a tight production schedule. This happened during the 1980s when South Korea's economy was going through a liberalization stage.
The government during this time was reducing its protectionist measures which helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to divest two of its textile companies at this time and the shipbuilding business was beginning to attract more foreign competition. The objective of the government 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 international dealings. However, the new economic climate caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy during the year 1985. The shift of government favour to small private companies was meant to spread the wealth which had previously been concentrated in Korea's industrial centers, Pusan and Seoul.