Daewoo expanded into the construction business, serving a development program for rural Korea, the new village movement. The company also took advantage of the growing African and Middle Eastern markets. Daewoo was given its GTC designation during this time. The South Korean government offered major investment support 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, without help, the chaebols will never endure the global recession caused by the 1970's oil crisis. Protectionist policies were needed to ensure 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 assume responsibility for the largest dockyard in the world, at Okpo. He said numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty rather than revenue. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation making oil rigs and ships which are competitively priced on a tight production timetable. This took place in the 1980s when South Korea's economy was experiencing a liberalization stage.
The government in this time was lessening its protectionist measures which helped to fuel the rise of small businesses and medium-sized companies. 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 goal 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. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into bankruptcy during 1985. The shift of government favour to small private companies was intended to spread the wealth which had previously been concentrated in Korea's industrial centers, Pusan and Seoul.