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. Major investment help was offered by the government of South Korea to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, unaided, the chaebols would never endure the world recession caused by the oil crisis in the 1970s. Protectionist policies were essential to make certain that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that Samsung and Hyundai had better skill in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the largest dockyard in the world, at Okpo. He said a lot of times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of earnings. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful corporation manufacturing competitively priced ships and oil rigs on a tight production timetable. This took place during the 1980s when the economy within South Korea was experiencing a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized companies. Daewoo was forced to rid two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. 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 worldwide dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy during the year 1985. The shift of government favour to small private companies was meant to spread the wealth which had previously been concentrated within Korea's industrial centers, Seoul and Pusan.