Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The corporation also took advantage of the burgeoning Middle Eastern and African markets. Daewoo received its GTC designation at this time. The South Korean government provided major investment help to the company in the form of subsidized loans. The competing nations were angered by the strict import controls of South Korea, but the government knew that, unaided, the chaebols will never endure the global recession caused by the oil crisis during the 1970s. Protectionist policies were required to make certain that the economy continued to grow.
Even though the government felt that Hyundai and Samsung had the greater expertise in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in the world was not a responsibility that Kim was wanting. He stated many times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of revenue. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful company producing ships and oil rigs that are competitively priced on a tight production schedule. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized businesses. Daewoo was forced to rid two of its important textile companies, and its shipbuilding industry faced stiffer competition from abroad. The government's goal 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 international dealings. Then again, the new economic climate caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into liquidation during the year 1985. The shift of government favour to small private businesses was meant to spread the wealth which had before been concentrated in Pusan and Seoul, Korea's industrial centers.