Daewoo expanded into the construction sector, serving a development program for rural Korea, the new village movement. The corporation also capitalized on the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. The South Korean government offered major investment help 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 endure the world recession caused by the oil crisis in the 1970s. Protectionist policies were necessary to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that Samsung and Hyundai had better skill in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the biggest dockyard within the world, at Okpo. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than earnings. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company manufacturing competitively priced ships and oil rigs on a tight production schedule. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures which 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 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 worldwide dealings. Then again, the new economic climate 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 meant to spread the wealth that had before been concentrated in Korea's industrial centers, Seoul and Pusan.