Daewoo expanded into the construction industry, helping the new village movement, a development program for rural Korea. The corporation also capitalized on the burgeoning African and Middle Eastern markets. Daewoo was given its GTC designation at this time. Major investment assistance was offered by the South Korean government to the corporation in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, independently, the chaebols would never survive the global recession caused by the oil crisis in the 1970s. Protectionist policies were needed to make certain that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that both Samsung and Hyundai had better knowledge in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the largest dockyard in the world, at Okpo. He said lots of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful corporation making oil rigs and ships which are competitively priced on a tight production timetable. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
In 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 crucial textile companies, and its shipbuilding industry faced stiffer competition from abroad. The government's objective 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 global dealings. Nonetheless, the new economic climate caused some chaebols to fail. The Kukje Group, among 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 before been concentrated within Korea's industrial centers, Pusan and Seoul.