Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The corporation also capitalized on the burgeoning African and Middle Eastern markets. Daewoo received its GTC designation during this time. The South Korean government offered major investment support to the company in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, unaided, the chaebols will never survive the world recession caused by the oil crisis during the 1970s. Protectionist policies were required to make certain that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Hyundai and Samsung had better expertise in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to take responsibility for the largest dockyard in 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 duty rather than earnings. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company making ships and oil rigs that are competitively priced on a tight production timetable. This happened during the 1980s when South Korea's economy was going through a liberalization stage.
The government in this time was reducing its protectionist measures which helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to rid two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. The goal of the government 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 global dealings. Then again, the new economic climate caused some chaebols to fail. The Kukje Group, among Daewoo's competitors, went into liquidation in the year 1985. The shift of government favour to small private businesses was meant to spread the wealth that had before been concentrated in Pusan and Seoul, Korea's industrial centers.