Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The company also took advantage of the growing African and Middle Eastern markets. Daewoo received its GTC designation at this time. Major investment support was offered by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, unaided, the chaebols would never endure the global recession caused by the 1970's oil crisis. 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 Samsung and Hyundai had greater knowledge in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He said a lot of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility instead of revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable company producing oil rigs and ships that are competitively priced on a tight production timetable. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
In 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 important textile companies, and its shipbuilding industry faced stiffer competition from abroad. The government's goal was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was meant to make the chaebols more aggressive in their worldwide dealings. Then again, the new economic climate caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into liquidation in 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated within Seoul and Pusan, Korea's industrial centers.