Daewoo expanded into the construction sector, serving the new village movement, a development program for rural Korea. The corporation also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. The government of South Korea provided major investment assistance to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, independently, the chaebols would never survive the global recession caused by the oil crisis in the 1970s. Protectionist policies were essential to ensure that the economy continued to grow.
Even if the government felt that both Hyundai and Samsung had the better expertise 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 said numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility instead of profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really profitable company making competitively priced ships and oil rigs on a tight production timetable. This happened in the 1980s when South Korea's economy was going through a liberalization stage.
The government throughout this time was lessening its protectionist measures that helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to divest two of its textile companies at this time and the shipbuilding industry was starting to attract more foreign competition. The objective of the government 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. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy during the year 1985. The shift of government favour to small private companies was intended to spread the wealth that had previously been concentrated within Pusan and Seoul, Korea's industrial centers.