Daewoo moved into the construction industry, helping to make the new village movement, which was a part of the rural development program in Korea. The company was also able to capitalize on the growing markets within the Middle East and in Africa. Daewoo received 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 nations were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols will never survive the world recession caused by the 1970's oil crisis. Protectionist policies were essential to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that 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 in 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 responsibility instead of profit. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful corporation producing competitively priced ships and oil rigs on a tight production timetable. This happened in the 1980s when the economy in South Korea was going through a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized companies. Daewoo was forced to divest two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from abroad. 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 international dealings. However, the new economic conditions caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into liquidation during the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had previously been concentrated in Seoul and Pusan, Korea's industrial centers.