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 corporation was also able to take advantage of the growing markets within the Middle East and in Africa. Daewoo received its GTC designation at this time. The South Korean government provided major investment support to the company 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 endure the world recession caused by the 1970's oil crisis. Protectionist policies were necessary to ensure that the economy continued to grow.
Even though the government felt that both Hyundai and Samsung had the greater skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard within the globe was not a responsibility that Kim was wanting. He said many times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation producing oil rigs and ships that are competitively priced on a tight production timetable. This took place during the 1980s when the economy within South Korea was going through a liberalization stage.
The government in this time was reducing its protectionist measures which 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 industry was beginning to attract more foreign competition. The objective of the government was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was intended to make the chaebols more aggressive in their international dealings. However, the new economic conditions caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into liquidation during the year 1985. The shift of government favour to small private companies was intended to spread the wealth which had before been concentrated within Seoul and Pusan, Korea's industrial centers.