Final answer:
True, countries set quotas to protect domestic industries from foreign competition, often in cases where national security or national identity is involved, as with the missile defense industry or culturally significant products like rice in Japan.
Step-by-step explanation:
True. A country can set a quota to safeguard one of its sectors from excessive overseas competition. This practice is a part of trade policy that nations utilize to control the volume of goods that can be imported into their markets. For instance, import quotas are numerical restrictions that set a limit on how many products can be brought into a country.
A historical example of this would be the quota imposed by the Reagan Administration during the early 1980s on the import of Japanese automobiles to protect the U.S. auto industry. Similarly, the Multifiber Agreement established to manage textile market shares is another instance where developed countries used quotas to protect their domestic industries.
Furthermore, in scenarios where national security or cultural significance is involved, such as the production of missile defense systems by geopolitical rivals or rice production in Japan, trade restrictions may be even more stringent to preserve these vital national interests.