Daewoo expanded into the construction sector, helping a development program for rural Korea, the new village movement. The company also took advantage of the growing African and Middle Eastern markets. Daewoo was given its GTC designation at this time. The government of South Korea provided major investment help to the company in the form of subsidized loans. The competing countries were angered by the strict import controls of South Korea, but the government knew that, without help, the chaebols would never survive the global recession caused by the oil crisis in the 1970s. Protectionist policies were essential to make sure that the economy continued to grow.
Even though the government felt that both Hyundai and Samsung had the better knowledge 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 said many times that the Korean government was stifling his entrepreneurial instinct by forcing him to carry out actions based on responsibility instead of earnings. In spite of his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a profitable company manufacturing oil rigs and ships that are competitively priced on a tight production timetable. This happened during the 1980s when South Korea's economy was experiencing a liberalization stage.
Throughout this period, the government relaxed its protectionist measures and encouraged the existence of medium- and small-sized companies. Daewoo was forced to divest two of its crucial textile corporations, and its shipbuilding industry faced stiffer competition from overseas. The government's goal 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 international dealings. However, the new economic climate caused some chaebols to fail. The Kukje Group, amongst Daewoo's competitors, went into bankruptcy during 1985. The shift of government favour to small private companies was intended to spread the wealth that had before been concentrated in Korea's industrial centers, Pusan and Seoul.