Daewoo moved into the construction business, helping to create the new village movement, that was a part of the rural development program in Korea. The company was also able to take advantage of the emergent markets within the Middle East and in Africa. Daewoo was given its GTC designation during this time. The government of South Korea offered major investment support to the company in the form of subsidized loans. The competing countries 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 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 suitable to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He said many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of profit. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful corporation producing oil rigs and ships that are competitively priced on a tight production timetable. This took place in the 1980s when South Korea's economy was going through a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized companies. Daewoo was forced to rid two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. 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. Nevertheless, the new economic conditions caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into liquidation in 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.