Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The company also took advantage of the growing African and Middle Eastern markets. Daewoo was given its GTC designation during this time. Major investment help was offered 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, unaided, the chaebols will never endure the world recession caused by the oil crisis during the 1970s. Protectionist policies were necessary 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 Hyundai and Samsung had greater knowledge 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 many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than profit. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation making competitively priced ships and oil rigs on a tight production schedule. This took place in the 1980s when the economy within South Korea was experiencing a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized companies. Daewoo was forced to rid two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. The objective 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 conditions caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into liquidation during the year 1985. The shift of government favour to small private companies was intended to spread the wealth that had before been concentrated in Seoul and Pusan, Korea's industrial centers.