see country selector here in firefox from the example in the documentation:
https://material-ui.com/components/autocomplete/#country-select

in chrome there is no support for country flags emoji so its not relevant there.

if found out the issue is duo to letter-spacing style property in the component .MuiAutocomplete-paper and in the body.
you can solve the issue by setting the letter-spacing for the .MuiAutocomplete-paper component to "0px"
for example to test this you can run this command in the console and then click to open the drawer and wait for the flags to appear in 3 seconds:

setTimeout(() => {
  document.querySelectorAll(".MuiAutocomplete-paper").forEach(e => e.style.letterSpacing = "0px")
}, 3000)

one solution that i found is just putting the emoji icon in a component with style property letter-spacing set to 0:

<span style={{ letterSpacing: "0px" }}>🇮🇱</span>