Daewoo expanded into the construction business, helping a development program for rural Korea, the new village movement. The corporation also took advantage of the growing African and Middle Eastern markets. Daewoo received its GTC designation at this time. The South Korean government offered major investment support to the corporation in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, without help, the chaebols would never survive the world recession caused by the 1970's oil crisis. Protectionist policies were needed to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even though Kim felt that both Hyundai and Samsung had better skill in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the biggest dockyard in the world, at Okpo. He stated many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than earnings. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation making oil rigs and ships that are competitively priced on a tight production timetable. This happened in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government in this time was lessening its protectionist measures that helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to rid two of its textile corporations at this time and the shipbuilding industry was starting to attract more foreign competition. The government's objective 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. Nonetheless, the new economic climate caused some chaebols to fail. Among Daewoo's competitors, the Kukje Group, went into liquidation in the year 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Pusan and Seoul.