Daewoo expanded into the construction industry, serving a development program for rural Korea, the new village movement. The corporation also capitalized on the growing Middle Eastern and African markets. Daewoo received its GTC designation at this time. Major investment assistance was provided by the government of South Korea to the company in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols would never survive the world 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 greater knowledge in heavy engineering and was more suitable to shipbuilding than Daewoo. Kim did not want to take responsibility for the largest dockyard within the world, at Okpo. He said lots of times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company manufacturing competitively priced ships and oil rigs on a tight production schedule. This took place during the 1980s when South Korea's economy was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to divest two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. The goal of the government was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was intended to make the chaebols more aggressive in their worldwide dealings. Nevertheless, the new economic conditions caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into liquidation during 1985. The shift of government favour to small private businesses was meant to spread the wealth which had before been concentrated within Seoul and Pusan, Korea's industrial centers.