Daewoo moved into the construction sector, helping to create the new village movement, which was a part of Korea's rural development program. The company was also able to capitalize on the emergent markets in the Middle East and within Africa. Daewoo received its GTC designation during this time. Major investment help was offered by the government of South Korea to the corporation in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, without help, the chaebols would never endure the world recession caused by the 1970's oil crisis. Protectionist policies were essential to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Samsung and Hyundai had greater expertise in heavy engineering and was more suitable to shipbuilding than Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of earnings. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable corporation making competitively priced oil rigs and ships on a tight production timetable. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized businesses. Daewoo was forced to divest two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from abroad. The objective of the government was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their international dealings. However, the new economic conditions caused some chaebols to fail. Amongst Daewoo's competitors, the Kukje Group, went into bankruptcy in the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had before been concentrated in Korea's industrial centers, Seoul and Pusan.