Daewoo expanded into the construction industry, helping 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 at this time. Major investment support was offered by the South Korean government to the corporation in the form of subsidized loans. The competing nations were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols will never survive the global recession caused by the oil crisis in 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 though Kim felt that Samsung and Hyundai 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 said many times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than earnings. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company producing oil rigs and ships that are competitively priced on a tight production schedule. This happened during the 1980s when the economy within South Korea was experiencing 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 divest two of its textile companies at this time and the shipbuilding industry was beginning 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 meant to make the chaebols more aggressive in their international dealings. However, the new economic climate caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into liquidation during 1985. The shift of government favour to small private businesses was meant to spread the wealth which had previously been concentrated in Korea's industrial centers, Pusan and Seoul.