Daewoo expanded into the construction industry, serving a development program for rural Korea, the new village movement. The corporation also capitalized on the burgeoning African and Middle Eastern markets. Daewoo was given its GTC designation at this time. Major investment assistance was offered by the South Korean government to the company in the form of subsidized loans. The strict import controls of South Korea angered competing nations, but the government knew that, independently, the chaebols would never endure the global recession caused by the 1970's oil crisis. Protectionist policies were necessary to ensure that the economy continued to grow.
Even though the government felt that both Samsung and Hyundai had the greater knowledge in heavy engineering, Daewoo was forced into shipbuilding by the government. Okpo, the largest dockyard within the world 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 carry out actions based on duty rather than profit. In spite of his unwillingness, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a successful company manufacturing oil rigs and ships that are competitively priced on a tight production timetable. This took place in the 1980s when South Korea's economy 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 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 meant to make the chaebols more aggressive in their worldwide dealings. Nonetheless, the new economic climate 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 before been concentrated in Seoul and Pusan, Korea's industrial centers.