Daewoo expanded into the construction industry, helping the new village movement, a development program for rural Korea. The corporation also took advantage of the growing Middle Eastern and African markets. Daewoo received its GTC designation at this time. The South Korean government provided major investment help 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, unaided, the chaebols will never survive the global recession caused by the 1970's oil crisis. Protectionist policies were essential to make sure that the economy continued to grow.
Even though the government felt that Hyundai and Samsung had the greater skill in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the biggest dockyard in the world was not a responsibility which Kim was wanting. He said numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility rather than earnings. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable corporation making oil rigs and ships which are competitively priced on a tight production timetable. This took place during the 1980s when the economy in South Korea was going through a liberalization stage.
In this period, the government relaxed its protectionist measures and encouraged the existence of small- and medium-sized companies. Daewoo was forced to divest two of its important textile companies, and its shipbuilding industry faced stiffer competition from abroad. 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 meant to make the chaebols more aggressive in their global dealings. However, the new economic conditions caused some chaebols to fail. The Kukje Group, among the competitors of Daewoo, went into bankruptcy in 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.