Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The company also capitalized on the burgeoning African and Middle Eastern markets. Daewoo received its GTC designation during this time. Major investment support was provided by the South Korean government to the corporation in the form of subsidized loans. The competing nations were angered by the strict import controls of South Korea, but the government knew that, independently, the chaebols would never survive the world recession caused by the oil crisis in the 1970s. Protectionist policies were essential to make certain that the economy continued to grow.
Even if the government felt that Hyundai and Samsung had the greater skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard within the globe was not a responsibility that Kim was wanting. He said many times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of revenue. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful company manufacturing competitively priced oil rigs and ships on a tight production schedule. This happened during the 1980s when South Korea's economy was going through a liberalization stage.
The government in this time was reducing its protectionist measures which helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to rid two of its textile corporations at this time and the shipbuilding industry was beginning to attract more foreign competition. The government's objective was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their international dealings. Nevertheless, the new economic conditions 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 companies was intended to spread the wealth which had previously been concentrated in Korea's industrial centers, Seoul and Pusan.