Daewoo moved into the construction business, helping to make the new village movement, which 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. The South Korean government offered major investment support to the corporation in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, without help, the chaebols would never survive the global recession caused by the oil crisis in the 1970s. Protectionist policies were essential to make certain that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that Hyundai and Samsung had better expertise in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the biggest dockyard within the world, at Okpo. He stated numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than revenue. In spite of his unwillingness, 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 during the 1980s when South Korea's economy was going through a liberalization stage.
The government during this time was lessening its protectionist measures which helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to divest two of its textile companies at this time and the shipbuilding business was starting to attract more foreign competition. The government's objective 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 global dealings. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into liquidation during 1985. The shift of government favour to small private companies was meant to spread the wealth that had previously been concentrated in Korea's industrial centers, Pusan and Seoul.