Daewoo expanded into the construction business, serving a development program for rural Korea, the new village movement. The company also capitalized on the growing Middle Eastern and African markets. Daewoo was given its GTC designation during this time. The South Korean government 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, unaided, the chaebols will never endure the world recession caused by the 1970's oil crisis. Protectionist policies were necessary to ensure 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 within the globe was not a responsibility which Kim was wanting. He stated numerous times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than earnings. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful company making ships and oil rigs that are competitively priced on a tight production schedule. This took place in the 1980s when South Korea's economy was going through a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized businesses. Daewoo was forced to divest two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from overseas. The objective of the government 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 global dealings. However, the new economic conditions caused some chaebols to fail. The Kukje Group, amongst the competitors of Daewoo, went into liquidation during 1985. The shift of government favour to small private companies was intended to spread the wealth that had before been concentrated within Seoul and Pusan, Korea's industrial centers.