Daewoo moved into the construction sector, helping to create 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 within the Middle East and in Africa. Daewoo was given its GTC designation at this time. Major investment assistance was offered by the South Korean government to the company in the form of subsidized loans. The strict import controls of South Korea angered competing countries, but the government knew that, independently, the chaebols would never endure the global recession caused by the 1970's oil crisis. Protectionist policies were needed 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 compared to Daewoo. Kim did not want to take responsibility for the largest dockyard within the world, at Okpo. He said numerous times that the government of Korea 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 successful corporation producing competitively priced oil rigs and ships on a tight production schedule. This took place during the 1980s when South Korea's economy was going through a liberalization stage.
The government during this time was reducing its protectionist measures which helped to fuel the rise of small companies and medium-sized companies. Daewoo had to divest two of its textile corporations at this time and the shipbuilding business was beginning 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 worldwide dealings. Nonetheless, the new economic climate caused some chaebols to fail. Amongst Daewoo's competitors, the Kukje Group, went into liquidation in 1985. The shift of government favour to small private businesses was meant to spread the wealth that had before been concentrated in Seoul and Pusan, Korea's industrial centers.