Privilege, Path Dependence, and Development: The Long-Term Economic Impact of Institutional Discrimination in Historic Transylvania

This study examines the long-term economic consequences of institutional discrimination through an analysis of the formal exclusion of the Romanian majority from Transylvania's feudal institutions between 1366-1437. Using path dependence theory as a theoretical framework, we investigate whether this historical exclusion created persistent trajectories of institutional underdevelopment and economic inequality that continue to influence the region's socioeconomic structure today. Our empirical analysis employs county-level data across Romania, comparing Transylvanian counties to other historical regions using regression models that control for contemporary socioeconomic factors. The results indicate that counties in historical Transylvania exhibit significantly lower GDP per capita (€2,150 less on average) and higher income inequality (3.5 percentage points higher Gini coefficient) compared to other Romanian regions. These findings provide robust empirical evidence supporting the hypothesis that medieval institutional exclusion created path-dependent trajectories that continue to shape economic outcomes seven centuries later. The study contributes to the broader literature on institutional economics, historical determinants of development, and the persistence of inequality, while offering insights into how privilege structures can become embedded in regional economic systems across centuries.