Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The corporation also capitalized on the burgeoning Middle Eastern and African markets. Daewoo was given its GTC designation at this time. The South Korean government offered major investment support 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 will never survive the global recession caused by the 1970's oil crisis. Protectionist policies were needed to make certain that the economy continued to grow.
Even though the government felt that both Hyundai and Samsung had the better knowledge in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard within the globe was not a responsibility that Kim was wanting. He stated many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than revenue. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation making competitively priced ships and oil rigs on a tight production schedule. This happened in the 1980s when South Korea's economy 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 corporations, and its shipbuilding industry faced stiffer competition from abroad. The goal of the government was to shift to a free market economy by encouraging a more effective allocation of resources. Such a policy was meant to make the chaebols more aggressive in their worldwide dealings. Then again, the new economic conditions caused some chaebols to fail. The Kukje Group, one of Daewoo's competitors, went into liquidation during the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had previously been concentrated in Korea's industrial centers, Pusan and Seoul.