Daewoo expanded into the construction business, helping a development program for rural Korea, the new village movement. The corporation also capitalized on the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. The South Korean government provided major investment help to the corporation in the form of subsidized loans. The competing nations 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 needed to make sure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that both Hyundai and Samsung had greater skill in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the largest dockyard in the world, at Okpo. He stated many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out 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 oil rigs and ships on a tight production timetable. This took place during the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government during this time was reducing its protectionist measures that helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to rid two of its textile corporations at this time and the shipbuilding industry 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 meant to make the chaebols more aggressive in their international dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, amongst Daewoo's competitors, went into bankruptcy during the year 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, Seoul and Pusan.