Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The corporation also took advantage of the burgeoning Middle Eastern and African markets. Daewoo was given its GTC designation at this time. Major investment help was provided by the South Korean government to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, without help, the chaebols will never survive the world recession caused by the 1970's oil crisis. Protectionist policies were necessary to make certain that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that Hyundai and Samsung had greater knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard in the world, at Okpo. He stated a lot of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company manufacturing competitively priced ships and oil rigs on a tight production schedule. This took place during the 1980s when the economy within South Korea was experiencing a liberalization stage.
The government throughout this time was lessening 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 business was beginning to attract more foreign competition. 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. The Kukje Group, amongst Daewoo's competitors, went into liquidation during the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had before been concentrated in Seoul and Pusan, Korea's industrial centers.