Daewoo expanded into the construction business, serving 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. The South Korean government provided major investment support to the corporation in the form of subsidized loans. South Korea's strict import controls angered competing countries, but the government knew that, independently, the chaebols will never endure the global recession caused by the oil crisis in the 1970s. Protectionist policies were necessary to ensure that the economy continued to grow.
Even though the government felt that both Hyundai and Samsung had the greater skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard within the globe was not a responsibility that Kim was wanting. He said many times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty rather than revenue. Despite his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company making competitively priced ships and oil rigs on a tight production schedule. This happened in the 1980s when the economy within South Korea was experiencing a liberalization stage.
The government throughout this time was reducing its protectionist measures that helped to fuel the rise of small businesses and medium-sized companies. Daewoo had to rid two of its textile companies 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 effective allocation of resources. Such a policy was intended to make the chaebols more aggressive in their international dealings. Nonetheless, the new economic climate caused some chaebols to fail. The Kukje Group, among Daewoo's competitors, went into bankruptcy in the year 1985. The shift of government favour to small private businesses was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Pusan and Seoul.