Daewoo expanded into the construction industry, serving 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 at this time. The South Korean government offered major investment support 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, independently, the chaebols will never survive the global recession caused by the 1970's oil crisis. Protectionist policies were necessary 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 assume responsibility for the biggest dockyard within the world, at Okpo. He stated lots of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than earnings. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company making 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.
The government during this time was reducing its protectionist measures which 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 industry was beginning 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 meant to make the chaebols more aggressive in their worldwide dealings. Nevertheless, the new economic conditions caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into liquidation during the year 1985. The shift of government favour to small private companies was intended to spread the wealth that had previously been concentrated within Korea's industrial centers, Seoul and Pusan.