Daewoo expanded into the construction industry, helping a development program for rural Korea, the new village movement. The corporation also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation during this time. Major investment assistance was provided by the government of South Korea to the corporation in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, without help, the chaebols will never survive the global 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 though 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 in the world, at Okpo. He said numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of earnings. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation manufacturing ships and oil rigs which are competitively priced on a tight production schedule. This took place in the 1980s when the economy in South Korea was going through a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized businesses. Daewoo was forced to divest two of its important textile corporations, and its shipbuilding industry faced stiffer competition from overseas. The government's objective 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. Then again, the new economic climate caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into liquidation during the year 1985. The shift of government favour to small private companies was intended to spread the wealth that had previously been concentrated in Pusan and Seoul, Korea's industrial centers.