Daewoo expanded into the construction sector, serving a development program for rural Korea, the new village movement. The company also capitalized on the growing Middle Eastern and African markets. Daewoo was given its GTC designation during this time. Major investment assistance was offered by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, unaided, the chaebols will never survive the global recession caused by the 1970's oil crisis. Protectionist policies were essential to make sure 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 skill in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard within the world, at Okpo. He stated a lot of times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of earnings. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company making competitively priced oil rigs and ships on a tight production schedule. This happened in the 1980s when the economy within South Korea was experiencing a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized businesses. Daewoo was forced to rid two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from overseas. 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. Nevertheless, the new economic climate caused some chaebols to fail. One of the competitors of Daewoo, the Kukje Group, went into liquidation in 1985. The shift of government favour to small private companies was meant to spread the wealth which had before been concentrated within Pusan and Seoul, Korea's industrial centers.