Daewoo moved into the construction sector, helping to create the new village movement, which was a part of Korea's rural development program. The corporation was also able to capitalize on the growing markets in the Middle East and within Africa. Daewoo received its GTC designation during this time. Major investment assistance was provided by the South Korean government to the corporation in the form of subsidized loans. The competing countries were angered by South Korea's strict import controls, but the government knew that, independently, the chaebols would never survive the global recession caused by the oil crisis in the 1970s. Protectionist policies were essential to make certain that the economy continued to grow.
Even if the government felt that Hyundai and Samsung had the greater skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard in the globe was not a responsibility that Kim was wanting. He said a lot of 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 successful corporation making competitively priced oil rigs and ships on a tight production schedule. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized businesses. Daewoo was forced to rid two of its crucial textile corporations, 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 effective allocation of resources. Such a policy was meant to make the chaebols more aggressive in their global dealings. Nevertheless, the new economic conditions caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into bankruptcy during 1985. The shift of government favour to small private businesses was intended to spread the wealth which had previously been concentrated in Korea's industrial centers, Seoul and Pusan.