Daewoo expanded into the construction industry, helping the new village movement, a development program for rural Korea. The company also took advantage of the burgeoning Middle Eastern and African markets. Daewoo was given its GTC designation during this time. Major investment support was offered by the South Korean government to the corporation in the form of subsidized loans. The strict import controls of South Korea angered competing countries, but the government knew that, without help, the chaebols would never endure the global recession caused by the oil crisis in the 1970s. Protectionist policies were necessary to make sure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Samsung and Hyundai had better skill in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard within 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 responsibility rather than revenue. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really profitable company manufacturing competitively priced ships and oil rigs on a tight production schedule. 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 businesses. Daewoo was forced to rid two of its important textile companies, 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 effective allocation of resources. Such a policy was meant to make the chaebols more aggressive in their worldwide dealings. However, the new economic conditions caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into bankruptcy in 1985. The shift of government favour to small private businesses was meant to spread the wealth that had before been concentrated in Korea's industrial centers, Seoul and Pusan.