Daewoo moved into the construction sector, helping to make the new village movement, which was a part of Korea's rural development program. The company was also able to capitalize on the growing markets in the Middle East and within Africa. Daewoo received its GTC designation during this time. The South Korean government provided major investment assistance to the corporation in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, unaided, the chaebols would never survive the world recession caused by the oil crisis during the 1970s. Protectionist policies were needed to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Hyundai and Samsung had better knowledge in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the largest dockyard within the world, at Okpo. He stated many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation manufacturing ships and oil rigs that are competitively priced on a tight production schedule. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures which helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to divest two of its textile companies at this time and the shipbuilding business was beginning to attract more foreign competition. The goal 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 international dealings. However, the new economic climate caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into bankruptcy during 1985. The shift of government favour to small private businesses was meant to spread the wealth which had before been concentrated in Pusan and Seoul, Korea's industrial centers.