Daewoo moved into the construction industry, helping to make the new village movement, which was a part of Korea's rural development program. The corporation was also able to take advantage of the emergent markets in the Middle East and within Africa. Daewoo received its GTC designation at this time. The government of South Korea provided major investment assistance to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, independently, the chaebols would never survive the world recession caused by the oil crisis in the 1970s. Protectionist policies were required to make sure that the economy continued to grow.
Even though the government felt that Hyundai and Samsung had the greater expertise in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard within the world was not a responsibility that Kim was wanting. He stated lots of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility instead of profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful company producing oil rigs and ships which are competitively priced on a tight production schedule. This took place in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government in this time was reducing its protectionist measures that helped to fuel the rise of small companies and medium-sized companies. Daewoo had to divest two of its textile companies at this time and the shipbuilding business was beginning to attract more foreign competition. The government's objective 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 international dealings. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, amongst the competitors of Daewoo, went into bankruptcy in the year 1985. The shift of government favour to small private companies was intended to spread the wealth that had before been concentrated within Korea's industrial centers, Pusan and Seoul.