Daewoo moved into the construction sector, helping to create the new village movement, that was a part of the rural development program in Korea. The company was also able to capitalize on the emergent markets in the Middle East and in Africa. Daewoo was given its GTC designation at this time. The government of South Korea offered major investment help to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, unaided, the chaebols would never endure 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 though Kim felt that both Samsung and Hyundai had better knowledge in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume 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 profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company making oil rigs and ships that are competitively priced on a tight production timetable. This happened during the 1980s when the economy within South Korea was going through a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized businesses. Daewoo was forced to divest two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from abroad. The objective of the government 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 worldwide dealings. However, the new economic conditions caused some chaebols to fail. Among the competitors of Daewoo, the Kukje Group, went into bankruptcy during the year 1985. The shift of government favour to small private businesses was meant to spread the wealth that had before been concentrated within Korea's industrial centers, Pusan and Seoul.