Daewoo expanded into the construction industry, serving a development program for rural Korea, the new village movement. The corporation also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation during this time. The government of South Korea provided major investment help to the corporation in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, unaided, the chaebols will never endure the world recession caused by the 1970's oil crisis. Protectionist policies were required to make sure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that both Hyundai and Samsung had greater expertise in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard in the world, at Okpo. He stated many 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 reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation making competitively priced oil rigs and ships on a tight production schedule. This took place during the 1980s when the economy within South Korea was experiencing 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 divest two of its important textile corporations, and its shipbuilding industry faced stiffer competition from overseas. The government's goal 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. However, the new economic conditions caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into liquidation during 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, Seoul and Pusan.