Daewoo expanded into the construction business, helping a development program for rural Korea, the new village movement. The corporation also took advantage of the growing Middle Eastern and African markets. Daewoo was given its GTC designation at this time. The South Korean government offered major investment help to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, unaided, the chaebols would never survive 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 greater skill in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to take responsibility for the biggest 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 duty instead of profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company manufacturing ships and oil rigs that are competitively priced on a tight production timetable. This took place in the 1980s when the economy in South Korea was going through a liberalization stage.
The government in this time was reducing 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 starting to attract more foreign competition. The government's objective was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was intended to make the chaebols more aggressive in their worldwide dealings. Nevertheless, the new economic climate caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into bankruptcy during 1985. The shift of government favour to small private companies was meant to spread the wealth that had previously been concentrated within Pusan and Seoul, Korea's industrial centers.