Daewoo expanded into the construction industry, helping a development program for rural Korea, the new village movement. The company also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. Major investment help was provided by the government of South Korea to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, independently, the chaebols will never survive 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 Hyundai and Samsung had greater knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the biggest dockyard within the world, at Okpo. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company manufacturing oil rigs and ships 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 lessening its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to rid two of its textile companies at this time and the shipbuilding business was beginning to attract more foreign competition. The government's goal 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 worldwide dealings. Nonetheless, the new economic conditions caused some chaebols to fail. Amongst Daewoo's competitors, the Kukje Group, went into liquidation during the year 1985. The shift of government favour to small private businesses was intended to spread the wealth that had previously been concentrated within Korea's industrial centers, Pusan and Seoul.