I am probably the only person in the world who could sit on a bus, admiring the lovely tropical scenery, and thinking about accounting, but there you are. The scenery here is amazing. But so is accounting.

I was thinking about it because the US-Vietnam trade council, which shepherded us around Vietnam in partnership with the German Marshall Fund, was telling us about the ways in which they're trying to help new entrepreneurs get a leg up. One of the items they mentioned was teaching them basic techniques like budgeting and accounting. Communist countries developed their own systems for tracking production, all of them thoroughly terrible. This is not precisely surprising in a place where prices are meaningless and your inventory management ledger is not a tool to be used but a barrier to be got around. Would-be Vietnamese entrepreneurs haven't the faintest clue how to run a for-profit enterprise. This is true of entrepreneurs in all countries, but unlike their counterparts abroad, the Vietnamese have nowhere in their own country to learn about such things. The situation in Cambodia, as you would imagine, is even worse.

We use accounting as a synonym for boring. Actually, it's not; it's fun in the same way that basic math is--if you do it right, everything smooths itself out into beautifully symmetrical answers. But more importantly, it's absolutely crucial to running any kind of a decent company, or economy. Accounting is just the sort of institution that development types are talking about when they say that "institutions matter". Accounting is the inherited wealth of generations of smart businessmen trying to make themselves smarter. You may think our great economic legacy is the factories and railroads and steel mills that litter the landscape, but it's not; it's the system by which we tell ourselves what we've got. Europe had all that other stuff basically bombed into nonexistance, and built it all back in a couple of decades. Places without decent accounting find it hard to get anything much more complicated than a Yak farm up and running. It's certainly not possible to have a capital market rich enough to fund a developed economy.

The developing world is lucky because it can import that human capital. Europe had to build it up over 500 years or so, which is why it took England a lot longer to get to $20,000 per capita GDP than it did Japan.

The most important remittance of migrants abroad may be the knowledge and expectations they bring back with them; Tyler Cowen argues that Mexico has now turned the corner economically because a critical mass of immigrants simply expects more from governance and social institutions. The Vietnamese diaspora to America is slowly bringing a similar stock of capital home. And places like Nike factories are continually upgrading the human capital stock at every level. We toured a factory yesterday, and while Nike worries about its turnover rates, which average about 25% a year, this is good news for Vietnam. Every worker who goes to another plant brings a little bit of institutional capital with them. Over time, they, more than the construction companies, will build the infrastructure of a developed economy.