Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The corporation also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation during this time. Major investment support was provided by the government of South Korea 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 will never endure the global recession caused by the 1970's oil crisis. Protectionist policies were needed to make sure that the economy continued to grow.
Even if the government felt that Samsung and Hyundai had the better skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in the globe was not a responsibility that Kim was wanting. He said numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than revenue. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful company manufacturing competitively priced ships and oil rigs on a tight production timetable. This happened during the 1980s when the economy within South Korea was experiencing a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized businesses. Daewoo was forced to divest two of its important textile corporations, 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 meant to make the chaebols more aggressive in their global dealings. Nevertheless, the new economic conditions caused some chaebols to fail. One of the competitors of Daewoo, the Kukje Group, went into liquidation in 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Pusan and Seoul.