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This study investigates the patterns and determinants of Korea’s horizontal intra-industry trade by employing a dynamic panel data analysis. The main findings of the study are as follows. An increase in the market size of both trading partners is associated with a higher level of horizontal intra-industry trade. Dissimilar economic sizes and per capita incomes have a negative effect on trade in horizontally differentiated products. Geographical distance and trade imbalance serve as obstacles to horizontal intra-industry trade. These findings have policy implications for reconsidering the orientation of promoting trade. Inclusive economic growth in the region, taking advantage of neighboring nations and making efforts to reduce trade imbalances between trading economies, can accelerate further trade expansion through horizontal intra-industry trade.

Comprehensive studies examining how Korean e-commerce trade works are currently limited. This study seeks to explore whether Korea’s e-commerce trade is more applicable to traditional trade theory or to modern theories. According to our analysis, the share of intra-industry trade (IIT) in modern trade theory is less than that of general trade for Korean e-commerce. Therefore, trade based on comparative advantage can be more valid in explaining e-commerce trade. From results in analyzing the gravity model, it was found that Korea’s e-commerce exports are higher as IIT with its FTA partners. In contrast, it is found that the lower the proportion of e-commerce trade, the higher chance for the import growth. Lastly, this study looked at what kind of comparative advantage is realized through imports. While Korea has been mostly exporting goods of high quality, its major trading partners import products based on price and selection of goods. In order for Korea’s e-commerce to grow, a more strategic approach is necessary. A strategy of high price based on superior quality is not effective, and as e-commerce has radically reduced sales and marketing costs, so a price reduction needs to be reflected in the price of goods for consumers.