Daewoo moved into the construction business, helping to make the new village movement, which was a part of the rural development program in Korea. The company was also able to take advantage of the growing markets in the Middle East and in Africa. Daewoo received its GTC designation during this time. Major investment assistance was provided by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, independently, the chaebols would never survive the world recession caused by the oil crisis during the 1970s. Protectionist policies were needed to make certain that the economy continued to grow.
Even though the government felt that Samsung and Hyundai had the better skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in the world was not a responsibility which Kim was wanting. He said numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful corporation making competitively priced ships and oil rigs on a tight production timetable. This took place in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government throughout this time was lessening its protectionist measures that helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to divest two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. The government's goal was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was intended to make the chaebols more aggressive in their global dealings. However, the new economic conditions caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into bankruptcy during 1985. The shift of government favour to small private companies was meant to spread the wealth which had before been concentrated in Korea's industrial centers, Seoul and Pusan.