Daewoo expanded into the construction industry, serving the new village movement, a development program for rural Korea. The company also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation at this time. Major investment help was provided by the South Korean government to the corporation 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 would never survive 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 Hyundai and Samsung had the better skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in the world 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 carry out actions based on responsibility instead of earnings. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really successful corporation manufacturing ships and oil rigs which are competitively priced on a tight production timetable. This took place in the 1980s when South Korea's economy was experiencing a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized businesses. Daewoo was forced to divest two of its important textile corporations, and its shipbuilding industry faced stiffer competition from overseas. The goal of the government was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was intended to make the chaebols more aggressive in their international dealings. Then again, the new economic climate caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy during the year 1985. The shift of government favour to small private businesses was intended to spread the wealth which had previously been concentrated in Korea's industrial centers, Seoul and Pusan.