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Like efficiency, postal trust is correlated with income, suggesting that it may be difficult for developing countries to greatly increase trust in the postal network. For those countries that do manage to improve trust, however (perhaps through institutional reform), the payoff may be high. One possible avenue suggested by the strong positive correlation between letters/staff and trust, is to reduce over-staffing in the postal network. It is worth noting that it appears efficiency and high quality of service are _positively_ related. Countries with low postal efficiency in the postal system (an index of below 0) average a trust score of 3.62, compared to countries with high efficiency index (above 0) which average 4.97. In other words, at least at first examination, there does not appear to be a necessary efficiency-quality trade-off—instead, it is possible that greater efficiency can drive improvements in both variables.<sup>22</sup> Regarding the impact of incumbent reform on efficiency and letters per capita, countries where no secondary post office is staffed by people outside the postal administration score an average of -0.43 on the performance index, while those with at least one such office score an average of 0.17. Having said that, the link appears statistically weak. There are at least two possible reasons for these results. There are significant data weaknesses. The measure of “percentage of offices that are privately staffed” is also only a crude and partial indicator of sector reform.<sup>23</sup> Second, it may be that the indicator does not capture what is important as part of a successful reform agenda. The case studies in Walsh (2001) covering Argentina, Tanzania, and Trinidad and Tobago suggest that privatization without successful regulation (Argentina) can produce worse results than corporatization and various types of management contract (Tanzania and Trinidad and Tobago). An important factor behind increasing the letter flow of the incumbent captured in UPU statistics may be better management at the top of the incumbent itself—ill captured by our measure of reform.

# **A New Model**

At the moment in many countries the “postal sector” is seen as coterminous with the post office. It may be more constructive to view letter and parcel delivery as the “postal sector”. Some proportion of letters and parcels in developing countries are delivered via the post office, which is one service provider in the postal sector. The post office frequently also provides services in other sectors, including the financial and government services sectors.<sup>24</sup>

> 22 Alex Dieke (in correspondence with the author) notes a similar phenomenon occurred in Europe in the 1990s, where TPG and Deutsche Post both saw improved routing times and reduced costs and employment.

> 23 Use of another measure of “reform”—countries with a World Bank project listed in the Bank’s postal projects database which began before 2000, that had a policy/regulatory reform component—suggests that project countries see slightly above average performance on the performance index.  However, the result is not statistically significant and is based on only eight countries that fit the criteria (Gabon, Guatemala, Guinea Bissau, Morocco, Tanzania, Togo, and Trinidad and Tobago).

> 24 The correlation matrix does not appear to suggest a particularly strong link between the level of postal financial services used by the population and basic postal performance.  Nonetheless, suggestive correlations do appear. Savings and giro accounts per capita is strongly correlated with receipts per employee (unlike the postal index itself), suggesting that the postal financial network may play an important role in creating income for the postal network and reflecting, perhaps, the greater importance to many post office customers of financial services provided through the postal network than letter services.