Daewoo expanded into the construction sector, 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 support was provided by the South Korean government to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, independently, the chaebols would never endure the global recession caused by the 1970's oil crisis. Protectionist policies were needed to make certain 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 skill in heavy engineering and was more suitable to shipbuilding than Daewoo. Kim did not want to take responsibility for the biggest dockyard within the world, at Okpo. He said numerous times that the government of Korea 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 very profitable company manufacturing ships and oil rigs which are competitively priced on a tight production schedule. This happened in the 1980s when the economy within South Korea was going through a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized businesses. Daewoo was forced to divest two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from abroad. 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 meant to make the chaebols more aggressive in their international dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into bankruptcy in 1985. The shift of government favour to small private businesses was intended to spread the wealth which had before been concentrated in Pusan and Seoul, Korea's industrial centers.