Final answer:
The statement that licensing allows firms to use their technology in foreign markets without a major investment in foreign countries is true. Companies can license their technology to foreign entities, enabling them to participate in foreign markets more easily and with less financial risk, while international trade can be seen as a form of innovative technology.
Step-by-step explanation:
Licensing allows firms to use their technology in foreign markets without a major investment in foreign countries. The answer to this statement is true. Through licensing agreements, companies can give foreign partners the right to produce and sell their products or use their technology while avoiding the cost of setting up operations abroad. This process enables firms to engage in foreign trade with less financial risk and the benefits of international market expansion. Additionally, changes in technology, like the increased application of computers to manufacturing processes, have led to a rise in demand for high-tech capital equipment where the US holds a comparative advantage, boosting its net exports.
High tariffs and complex permit systems can insulate domestic firms from competition, but they may also lead to increased monopoly power, corruption, and reduced competition. This highlights why innovative firms can benefit from international trade and licensing, and why reducing competition through trade restrictions can be harmful to the economy.