Daewoo expanded into the construction business, helping the new village movement, a development program for rural Korea. The corporation also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation at this time. Major investment support was provided by the South Korean government to the company in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols would never endure 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 if Kim felt that Hyundai and Samsung had greater expertise in heavy engineering and was more suited to shipbuilding than Daewoo. Kim did not want to assume responsibility for the largest dockyard in the world, at Okpo. He said numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company making competitively priced oil rigs and ships on a tight production timetable. This took place in the 1980s when the economy within South Korea was going through a liberalization stage.
During 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 government's objective 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 international dealings. Nevertheless, the new economic climate caused some chaebols to fail. The Kukje Group, among Daewoo's competitors, went into bankruptcy during 1985. The shift of government favour to small private businesses was meant to spread the wealth that had previously been concentrated in Korea's industrial centers, Seoul and Pusan.