Daewoo expanded into the construction sector, serving the new village movement, a development program for rural Korea. The corporation also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. The South Korean government offered major investment help to the company in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, unaided, the chaebols would never survive the world recession caused by the oil crisis during the 1970s. Protectionist policies were essential to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Hyundai and Samsung had better knowledge in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume 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 carry out actions based on duty rather than revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company producing competitively priced oil rigs and ships on a tight production timetable. This took place in the 1980s when South Korea's economy was experiencing a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized companies. Daewoo was forced to rid two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from abroad. The objective of the government 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 international dealings. Nonetheless, the new economic conditions caused some chaebols to fail. Among Daewoo's competitors, the Kukje Group, went into liquidation during the year 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Seoul and Pusan.