Daewoo expanded into the construction industry, serving the new village movement, a development program for rural Korea. The corporation also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. Major investment support was offered by the government of South Korea to the company in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, independently, the chaebols would never survive the world recession caused by the oil crisis in the 1970s. Protectionist policies were needed to make certain 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 knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the biggest dockyard in the world, at Okpo. He said numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of revenue. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company manufacturing ships and oil rigs which are competitively priced on a tight production schedule. This happened during the 1980s when South Korea's economy was going through a liberalization stage.
The government in this time was lessening its protectionist measures which helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to rid two of its textile corporations at this time and the shipbuilding business was beginning 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 global dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into liquidation in the year 1985. The shift of government favour to small private businesses was meant to spread the wealth which had before been concentrated in Seoul and Pusan, Korea's industrial centers.