Daewoo expanded into the construction business, helping a development program for rural Korea, the new village movement. The corporation also capitalized on the growing African and Middle Eastern markets. Daewoo received its GTC designation during this time. The government of South Korea offered major investment help 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, without help, the chaebols will never survive the world recession caused by the 1970's oil crisis. Protectionist policies were necessary to make sure that the economy continued to grow.
Even if the government felt that Samsung and Hyundai had the better knowledge in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard in the world was not a responsibility which 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 duty instead of revenue. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation manufacturing ships and oil rigs that are competitively priced on a tight production timetable. This happened during the 1980s when South Korea's economy was going through a liberalization stage.
The government throughout this time was reducing its protectionist measures that helped to fuel the rise of small companies and medium-sized companies. Daewoo had to divest two of its textile companies at this time and the shipbuilding industry was beginning 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 meant to make the chaebols more aggressive in their worldwide dealings. Nevertheless, 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 companies was intended to spread the wealth which had previously been concentrated in Korea's industrial centers, Seoul and Pusan.