Daewoo moved into the construction business, helping to make the new village movement, that 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 in Africa. Daewoo was given its GTC designation at this time. The South Korean government provided major investment assistance to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, independently, the chaebols will never endure the world recession caused by the 1970's oil crisis. Protectionist policies were required to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Hyundai and Samsung had better knowledge 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 stated a lot of times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable company making oil rigs and ships that are competitively priced on a tight production schedule. This happened during the 1980s when the economy within South Korea was going through a liberalization stage.
Throughout 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 important textile companies, and its shipbuilding industry faced stiffer competition from overseas. 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 global dealings. Then again, the new economic climate caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into bankruptcy in 1985. The shift of government favour to small private businesses was meant to spread the wealth that had previously been concentrated within Seoul and Pusan, Korea's industrial centers.