Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The corporation also capitalized on the burgeoning Middle Eastern and African markets. Daewoo received its GTC designation at this time. Major investment help was offered by the government of South Korea to the company in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, without help, the chaebols will never endure the global recession caused by the 1970's oil crisis. Protectionist policies were necessary to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Samsung and Hyundai had better knowledge in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard in the world, at Okpo. He stated many times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company making competitively priced ships and oil rigs on a tight production schedule. This took place during 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 medium- and small-sized businesses. Daewoo was forced to divest two of its important textile companies, and its shipbuilding industry faced stiffer competition from overseas. The government's objective was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was intended to make the chaebols more aggressive in their global dealings. Nonetheless, the new economic conditions caused some chaebols to fail. One of 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 which had previously been concentrated within Korea's industrial centers, Seoul and Pusan.