Daewoo expanded into the construction industry, helping the new village movement, a development program for rural Korea. The corporation also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation at this time. Major investment support was offered by the South Korean government to the company in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, independently, the chaebols will never endure the global recession caused by the oil crisis during the 1970s. Protectionist policies were needed to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that Hyundai and Samsung had better knowledge in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the biggest dockyard in the world, at Okpo. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than earnings. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful company making oil rigs and ships which are competitively priced on a tight production schedule. This happened during the 1980s when South Korea's economy was going through a liberalization stage.
The government throughout this time was lessening its protectionist measures which helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to divest two of its textile corporations at this time and the shipbuilding business was beginning to attract more foreign competition. The objective of the government was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their international dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy in the year 1985. The shift of government favour to small private businesses was intended to spread the wealth which had before been concentrated within Korea's industrial centers, Pusan and Seoul.