Daewoo expanded into the construction business, serving a development program for rural Korea, the new village movement. The corporation also capitalized on the burgeoning Middle Eastern and African 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 will never endure the global 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 if Kim felt that both Hyundai and Samsung had greater skill in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to take responsibility for the largest dockyard within the world, at Okpo. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of earnings. Despite his unwillingness, 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 happened during the 1980s when the economy within South Korea was going through a liberalization stage.
The government during this time was reducing its protectionist measures which helped to fuel the rise of small companies and medium-sized businesses. 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 efficient allocation of resources. Such a policy was intended to make the chaebols more aggressive in their global dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy during 1985. The shift of government favour to small private businesses was meant to spread the wealth that had before been concentrated in Korea's industrial centers, Pusan and Seoul.