Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The corporation also took advantage of the growing African and Middle Eastern markets. Daewoo received its GTC designation during this time. The government of South Korea provided major investment help 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, independently, the chaebols would never endure the world 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 skill in heavy engineering and was more suitable to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard in the world, at Okpo. He stated lots of 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 successful company making competitively priced oil rigs and ships on a tight production timetable. This happened in the 1980s when South Korea's economy 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 divest two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. 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. Nonetheless, the new economic climate caused some chaebols to fail. The Kukje Group, amongst Daewoo's competitors, went into liquidation in 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Seoul and Pusan.