Daewoo expanded into the construction sector, helping the new village movement, a development program for rural Korea. The corporation also capitalized on the growing African and Middle Eastern markets. Daewoo was given its GTC designation at this time. The South Korean government offered major investment help to the company in the form of subsidized loans. The competing nations were angered by South Korea's strict import controls, but the government knew that, independently, the chaebols will never survive the global recession caused by the 1970's oil crisis. Protectionist policies were needed to ensure that the economy continued to grow.
Even though the government felt that both Hyundai and Samsung had the greater expertise in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard within the world was not a responsibility that Kim was wanting. He stated many times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a very successful company manufacturing competitively priced oil rigs and ships on a tight production timetable. This took place in the 1980s when the economy within South Korea was experiencing a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized companies. Daewoo was forced to rid two of its crucial textile companies, and its shipbuilding industry faced stiffer competition from abroad. The government's objective 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. The Kukje Group, among Daewoo's competitors, went into liquidation in 1985. The shift of government favour to small private businesses was meant to spread the wealth which had previously been concentrated in Korea's industrial centers, Pusan and Seoul.