Daewoo expanded into the construction business, helping a development program for rural Korea, the new village movement. The company also capitalized on the burgeoning Middle Eastern and African markets. Daewoo was given its GTC designation during this time. Major investment assistance 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 would never survive the world recession caused by the 1970's oil crisis. Protectionist policies were required to ensure that the economy continued to grow.
Even though 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 within 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 undertake actions based on responsibility rather than profit. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company making competitively priced oil rigs and ships on a tight production timetable. This took place during the 1980s when South Korea's economy was experiencing a liberalization stage.
The government during this time was lessening its protectionist measures which helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to rid two of its textile companies at this time and the shipbuilding business was starting to attract more foreign competition. The government's goal 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. However, the new economic conditions caused some chaebols to fail. Among Daewoo's competitors, the Kukje Group, went into liquidation during 1985. The shift of government favour to small private businesses was intended to spread the wealth which had before been concentrated in Korea's industrial centers, Pusan and Seoul.