Daewoo expanded into the construction industry, serving the new village movement, a development program for rural Korea. The company also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation at this time. Major investment help was offered by the South Korean government to the company 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 1970's oil crisis. Protectionist policies were necessary to ensure 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 better knowledge 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 said many times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty rather than revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company making ships and oil rigs that are competitively priced on a tight production timetable. This happened in the 1980s when the economy within South Korea was going through a liberalization stage.
The government throughout 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 companies 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 global dealings. Nevertheless, the new economic conditions caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into liquidation in the year 1985. The shift of government favour to small private companies was meant to spread the wealth which had before been concentrated within Seoul and Pusan, Korea's industrial centers.