The economic effects of the territoriality principle

The territoriality principle stipulates that minority communities in a given territory should be linguistically accommodated. What are the economic effects of this principle? In this paper, we argue that the recognition of multiple languages confers respect on the minority group; it allows people to engage and participate meaningfully in society – thereby facilitating economic well-being. There is, however, a caveat: when recognition happens in areas where the minority is the overwhelming majority, there is a risk that the near-exclusive use of the minority language cuts the community off from the larger national state, which in turn stunts development. To test this, we focus on Transylvania, Romania. We leverage a legal stipulation that recognizes minority languages in areas where the minority constitutes more than 20% of the population. Using data at the municipal level, we find that recognition increases economic well-being in general – but not in areas where the minority are numerically dominant. Our results are normatively welcoming, but they also caution governments not simply to recognize minority languages but also to protect them adequately.