Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The company also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation during this time. The South Korean government provided major investment support to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, without help, the chaebols would never survive the global 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 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 profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very profitable company producing oil rigs and ships that are competitively priced on a tight production schedule. This took place during the 1980s when the economy within South Korea 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 companies. Daewoo had to divest two of its textile corporations 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 efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their international dealings. Nonetheless, the new economic conditions caused some chaebols to fail. The Kukje Group, amongst the competitors of Daewoo, went into bankruptcy in 1985. The shift of government favour to small private businesses was intended to spread the wealth that had previously been concentrated within Korea's industrial centers, Seoul and Pusan.