Daewoo expanded into the construction sector, serving the new village movement, a development program for rural Korea. The corporation also capitalized on the burgeoning Middle Eastern and African markets. Daewoo received its GTC designation at this time. The government of South Korea provided major investment assistance to the corporation in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, without help, the chaebols would never survive the world 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 though Kim felt that Hyundai and Samsung had better knowledge in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to take responsibility for the largest dockyard within the world, at Okpo. He stated a lot of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation manufacturing ships and oil rigs which are competitively priced on a tight production timetable. This took place in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government throughout this time was lessening its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to rid two of its textile companies at this time and the shipbuilding business was beginning to attract more foreign competition. The government's goal 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. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, among 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 previously been concentrated in Pusan and Seoul, Korea's industrial centers.