Daewoo expanded into the construction sector, serving the new village movement, a development program for rural Korea. The company also capitalized on the growing Middle Eastern and African markets. Daewoo was given its GTC designation at this time. Major investment support was provided by the government of South Korea to the corporation in the form of subsidized loans. The competing nations were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols will never endure the global recession caused by the oil crisis during the 1970s. Protectionist policies were essential to ensure that the economy continued to grow.
Even though the government felt that both Hyundai and Samsung had the better expertise in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in the globe was not a responsibility which Kim was wanting. He stated lots of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to undertake actions based on responsibility instead of earnings. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company making ships and oil rigs that are competitively priced on a tight production timetable. This took place during the 1980s when the economy within South Korea was going through a liberalization stage.
The government during this time was reducing its protectionist measures which helped to fuel the rise of small companies and medium-sized companies. Daewoo had to rid two of its textile corporations at this time and the shipbuilding industry was starting to attract more foreign competition. The objective 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. Nonetheless, the new economic conditions caused some chaebols to fail. Amongst the competitors of Daewoo, the Kukje Group, went into bankruptcy during 1985. The shift of government favour to small private companies was meant to spread the wealth which had previously been concentrated in Korea's industrial centers, Seoul and Pusan.