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Diplomacy in Action

Postal reform in developing countries


February 8, 2009

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Abstract – Paper Delivered at:

Advanced Workshop in Regulation and Competition
27th Annual Eastern Conference
Skytop Lodge, Skytop, Pennsylvania, May 14–16, 2008

CRRI


 

Postal reform in developing countries: challenges and choices

By Juan B. Ianni

There has been significant progress on postal reform within industrialized countries. The European Union has established an agenda for liberalizing its postal markets while maintaining universal postal services. Several EU markets have already completely liberalized and a number of universal service providers (USPs) privatized. The EU also has defined precise quality and access standards for universal service and developed cost- based international compensation systems. The United States recently enacted reform legislation and Japan has undertaken a serious discussion on postal reform. Finally, Australia and New Zealand have continued to move forward on postal reform programs initiated years ago.

The pace of postal reform for developing countries, particularly for least developed countries, has been far slower. In fact, in many developing countries, the USP retains extensive, but largely ineffective reserved areas while customers pay for extra for value- added options such as advice of delivery to ensure that mail is received. Furthermore, despite such regulatory advantages, many USP’s (particularly in Latin America) are losing market share. Nearly half of USPs in countries with GDPs under $5,000 USD per capita operate at a loss while posting mail volumes of less than five pieces per person annually.

The purpose of this paper is to indicate some major inhibitors of postal reform in developing countries (including low volumes, unregulated markets, economic and demographic obstacles, and imprecise universal service definitions) and suggest strategies to overcome them. Achieving success in this area is a worthwhile goal: poorly performing USP’s require redirection of scarce development resources and force consumers to use costly alternatives to basic mail services. The author will draw on the vibrant discussions now going on among postal reformers concerning postal markets attributes, the continued relevance of universal postal services, and the relative efficiencies of reserved areas versus competition to provide such services. This paper will also draw lessons from current and past postal reform efforts in the developing world.



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