No, not all countries have that much freedom. The fact is some governments are so totalitarian that the people and companies that exist there only do what they're allowed to do.
You are absolutely correct. I work overseas in some challenging areas and this is how some countries operate. Most of these governments aren’t telling these companies what to produce, but they are requiring foreign companies operating in their country to purchase materials from these national companies. Good or bad these products are required for doing business.