Daewoo expanded into the construction sector, serving the new village movement, a development program for rural Korea. 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 assistance to the corporation in the form of subsidized loans. The competing countries were angered by South Korea's strict import controls, but the government knew that, without help, the chaebols will never endure the global recession caused by the 1970's oil crisis. Protectionist policies were essential to make certain that the economy continued to grow.
Even if the government felt that both Samsung and Hyundai had the better knowledge in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard in the globe was not a responsibility which Kim was wanting. He said a lot of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on duty instead of profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation producing competitively priced ships and oil rigs on a tight production timetable. This happened during the 1980s when the economy within South Korea was going through a liberalization stage.
During this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized businesses. Daewoo was forced to rid two of its crucial textile corporations, 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 intended to make the chaebols more aggressive in their worldwide dealings. Nonetheless, the new economic conditions 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 companies was intended to spread the wealth which had before been concentrated in Pusan and Seoul, Korea's industrial centers.