Daewoo expanded into the construction business, helping a development program for rural Korea, the new village movement. The corporation also took advantage of the burgeoning Middle Eastern and African markets. Daewoo received its GTC designation during this time. The government of South Korea provided major investment assistance to the corporation in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, independently, the chaebols would never survive the world recession caused by the 1970's oil crisis. Protectionist policies were required 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 biggest dockyard within the globe was not a responsibility that Kim was wanting. He said numerous times that the Korean government was stifling his entrepreneurial instinct by forcing him to undertake 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 producing oil rigs and ships which are competitively priced on a tight production timetable. This took place during the 1980s when South Korea's economy was going through a liberalization stage.
The government during this time was reducing its protectionist measures that helped to fuel the rise of small companies and medium-sized businesses. Daewoo had to rid two of its textile corporations at this time and the shipbuilding industry was beginning to attract more foreign competition. The government's objective 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. Nevertheless, the new economic climate caused some chaebols to fail. The Kukje Group, one of the competitors of Daewoo, went into bankruptcy in the year 1985. The shift of government favour to small private companies was meant to spread the wealth that had before been concentrated within Seoul and Pusan, Korea's industrial centers.