Daewoo moved into the construction industry, helping to create the new village movement, which was a part of the rural development program in Korea. The company was also able to capitalize on the growing markets within the Middle East and in Africa. Daewoo received its GTC designation during this time. Major investment assistance was offered by the government of South Korea to the company in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, unaided, the chaebols would never endure the global recession caused by the 1970's oil crisis. Protectionist policies were essential to make certain that the economy continued to grow.
Even though the government felt that Hyundai and Samsung had the better expertise in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard within the world was not a responsibility that Kim was wanting. He said lots of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than profit. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company manufacturing competitively priced ships and oil rigs on a tight production schedule. This took place during the 1980s when South Korea's economy was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures that helped to fuel the rise of small companies and medium-sized companies. Daewoo had to rid two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. 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 intended to make the chaebols more aggressive in their worldwide dealings. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, amongst the competitors of Daewoo, went into liquidation during the year 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.