Daewoo expanded into the construction industry, helping the new village movement, a development program for rural Korea. The company also took advantage of the growing African and Middle Eastern markets. Daewoo received its GTC designation at this time. Major investment assistance was offered by the South Korean government to the company in the form of subsidized loans. The strict import controls of South Korea angered competing countries, but the government knew that, independently, the chaebols will never survive the world recession caused by the oil crisis in the 1970s. Protectionist policies were necessary to ensure 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 knowledge in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest 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 instead of revenue. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful corporation producing competitively priced ships and oil rigs on a tight production schedule. This happened during the 1980s when the economy in South Korea was going through 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 important textile companies, and its shipbuilding industry faced stiffer competition from overseas. The government's goal was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their worldwide dealings. Nevertheless, the new economic climate caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into bankruptcy in 1985. The shift of government favour to small private businesses was intended to spread the wealth that had previously been concentrated in Korea's industrial centers, Pusan and Seoul.