Daewoo moved into the construction industry, helping to create the new village movement, which was a part of Korea's rural development program. The company was also able to take advantage of the growing markets in the Middle East and within Africa. Daewoo was given its GTC designation during this time. The government of South Korea provided major investment support 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 endure the global recession caused by the oil crisis during the 1970s. Protectionist policies were required to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that Samsung and Hyundai had better expertise in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard in the world, at Okpo. He said numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than earnings. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable company manufacturing competitively priced oil rigs and ships on a tight production timetable. This took place in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures which helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to rid two of its textile corporations at this time and the shipbuilding industry was starting to attract more foreign competition. The government's goal 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. Nonetheless, the new economic climate caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into bankruptcy in the year 1985. The shift of government favour to small private companies was intended to spread the wealth which had before been concentrated within Korea's industrial centers, Pusan and Seoul.