Daewoo expanded into the construction business, serving a development program for rural Korea, the new village movement. The corporation also took advantage of the growing African and Middle Eastern markets. Daewoo was given its GTC designation during this time. Major investment help was offered by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, without help, the chaebols will never survive the world 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 if Kim felt that Hyundai and Samsung had greater knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard within the world, at Okpo. He stated many times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility rather than profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation manufacturing ships and oil rigs that are competitively priced on a tight production timetable. This happened in the 1980s when South Korea's economy was experiencing a liberalization stage.
The government throughout this time was reducing its protectionist measures which helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to divest two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. The objective of the government was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was intended to make the chaebols more aggressive in their global dealings. Nevertheless, the new economic climate caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into liquidation in the year 1985. The shift of government favour to small private companies was meant to spread the wealth which had previously been concentrated in Korea's industrial centers, Seoul and Pusan.