Daewoo expanded into the construction industry, helping the new village movement, a development program for rural Korea. The company 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 competing countries were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols will never survive the global recession caused by the oil crisis during the 1970s. Protectionist policies were essential to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Hyundai and Samsung 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 in the world, at Okpo. He said many 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 reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company producing competitively priced ships and oil rigs on a tight production schedule. This took place in the 1980s when the economy in South Korea was experiencing 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 companies, and its shipbuilding industry faced stiffer competition from overseas. The objective of the government 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 international dealings. Nevertheless, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into liquidation during 1985. The shift of government favour to small private businesses was intended to spread the wealth that had previously been concentrated in Korea's industrial centers, Seoul and Pusan.