Daewoo moved into the construction business, helping to create the new village movement, which was a part of Korea's rural development program. The corporation was also able to take advantage of the growing markets in the Middle East and in Africa. Daewoo received its GTC designation during this time. The government of South Korea provided major investment help to the corporation in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, independently, the chaebols will never endure the world recession caused by the oil crisis in the 1970s. Protectionist policies were needed to make sure that the economy continued to grow.
Even if the government felt that both Hyundai and Samsung had the greater knowledge in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in 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 duty instead of earnings. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation making competitively priced ships and oil rigs on a tight production schedule. 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 small- and medium-sized companies. Daewoo was forced to rid two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. The goal 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. Amongst the competitors of Daewoo, the Kukje Group, went into bankruptcy during 1985. The shift of government favour to small private companies was meant to spread the wealth that had before been concentrated within Korea's industrial centers, Pusan and Seoul.