Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The company also capitalized on the burgeoning African and Middle Eastern markets. Daewoo was given its GTC designation during this time. The South Korean government provided major investment help 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 would never survive the global recession caused by the oil crisis in the 1970s. Protectionist policies were essential to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Samsung and Hyundai had better expertise in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard within the world, at Okpo. He said numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty instead of earnings. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company making oil rigs and ships that are competitively priced on a tight production schedule. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
The government during this time was lessening its protectionist measures that helped to fuel the rise of small companies and medium-sized companies. Daewoo had to divest two of its textile corporations at this time and the shipbuilding industry was beginning to attract more foreign competition. The government's objective was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was intended to make the chaebols more aggressive in their worldwide dealings. Nonetheless, the new economic climate caused some chaebols to fail. The Kukje Group, among Daewoo's competitors, went into bankruptcy in the year 1985. The shift of government favour to small private businesses was meant to spread the wealth that had before been concentrated within Korea's industrial centers, Seoul and Pusan.