Daewoo expanded into the construction sector, serving a development program for rural Korea, the new village movement. The company also capitalized on the burgeoning African and Middle Eastern markets. Daewoo received 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 strict import controls of South Korea angered competing countries, but the government knew that, without help, the chaebols will never endure the world recession caused by the oil crisis during the 1970s. Protectionist policies were required 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 greater skill in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the biggest 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. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable company manufacturing oil rigs and ships which are competitively priced on a tight production timetable. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized companies. Daewoo was forced to rid two of its crucial textile corporations, 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. Nonetheless, the new economic climate caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into bankruptcy in the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had before been concentrated within Korea's industrial centers, Pusan and Seoul.