Daewoo expanded into the construction business, helping the new village movement, a development program for rural Korea. The corporation also capitalized on the growing Middle Eastern and African markets. Daewoo was given its GTC designation during this time. Major investment help was provided by the government of South Korea to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, unaided, the chaebols will never survive the world recession caused by the 1970's oil crisis. Protectionist policies were required to make sure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that Samsung and Hyundai had greater expertise 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 numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable company making competitively priced ships and oil rigs on a tight production timetable. This took place in the 1980s when South Korea's economy was going through a liberalization stage.
Throughout 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 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 efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their international dealings. Nevertheless, the new economic conditions caused some chaebols to fail. The Kukje Group, among Daewoo's competitors, went into liquidation in 1985. The shift of government favour to small private businesses was meant to spread the wealth which had before been concentrated in Korea's industrial centers, Seoul and Pusan.