Daewoo expanded into the construction sector, serving the new village movement, a development program for rural Korea. The corporation also capitalized on the burgeoning Middle Eastern and African markets. Daewoo was given its GTC designation during this time. Major investment help was offered by the government of South Korea 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, unaided, the chaebols will never survive the world recession caused by the oil crisis in the 1970s. 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 both Samsung and Hyundai had better expertise in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He said a lot of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company making ships and oil rigs which are competitively priced on a tight production schedule. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
In 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 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 effective allocation of resources. Such a policy was intended to make the chaebols more aggressive in their global dealings. Then again, the new economic conditions caused some chaebols to fail. Among the competitors of Daewoo, the Kukje Group, went into bankruptcy in the year 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Seoul and Pusan.