According to Jedlicki (1950), in many cases the term "German colonization" does not refer to an actual migration of Germans, but rather to the internal migration of native populations (Poles, Hungarians, etc.) from the countryside to the cities, which then adopted laws modeled on those of the German towns of Magdeburg and Lübeck. 19th- and 20th-century German historians have often exaggerated the importance of the adoption of Salic law and settlement in Central and Eastern Europe for political reasons; while the phenomenon did increase the economic well being of destination countries, at least some of them, like medieval Poland, were already quite developed economically and politically and the local Slavic population was already far more strongly established in its towns than previously believed; the whole process took part in territories where Slavic solid organisational structures existed.

Before and during the time of German settlement, late medieval Central and Eastern European societies underwent deep cultural changes in demography, religion, law and administration, agriculture, settlement numbers and structures. Thus Ostsiedlung is part of a process termed Ostkolonisation ("east colonization") or Hochmittelalterlicher Landesausbau ("high medieval land consolidation"), although these terms are sometimes used synonymously.

Ethnic conflicts erupted between the newly arrived settlers and local populations, sometimes bloody, and expulsions of native populations are also known. In several areas subject to the Ostsiedlung, the existing population was later discriminated against and pushed away from administration.

The colonization of Transylvania by Germans was begun by King Géza II of Hungary (1141–1162). For decades, the main task of the German settlers was to defend the southeastern border of the Kingdom of Hungary. The colonization continued until the end of the 13th century. Although the colonists came mostly from the western Holy Roman Empire and generally spoke Franconian dialects, they were collectively known as Saxons because of Germans working for the Hungarian chancellery.

Although the primary reason for Géza II's invitation was border defense, employing the Szeklers against invaders, Germans were also sought for their mining expertise and ability to develop the region's economy. Most colonists to this era came from Luxembourg and the Moselle River region.

A second phase of German settlement during the early 13th century consisted of settlers primarily from the Rhineland, Southern Low Countries, and the Moselle region, with others from Thuringia, Bavaria, and even from France. A settlement in northeastern Transylvania was centered on the town Nösen, the later Bistritz (Bistri?a), located on the Somes River. The surrounding area became known as the Nösnerland. Continued immigration from the Empire expanded the area of the Saxons further to the east. Settlers from the Hermannstadt region spread into theHârtibaciu River Valley (Harbachtal) and to the foot of the Cibin (Zibin) and Sebe? (Mühlbacher) mountains. The latter region, centered on the city of Mühlbach (Sebe?) was known as the Unterwald. To the north of Hermannstadt was settled the Weinland near Mediasch (Media?). The term "Saxon" was applied to all Germans of the regions because the first German settlers who came to the Hungarian kingdom were poor miners or convicted groups from Saxony

In 1211 King Andrew II of Hungary invited the Teutonic Knights to settle and defend the Burzenland in the southeastern corner of Transylvania. To guard the mountain passes of the Carpathians (Karpaten) against the Cumans, the Knights constructed numerous castles and towns, including the major city of Kronstadt (Bra?ov). Alarmed by the Knights' rapidly expanding power, in 1225 Andrew II expelled the Order which henceforth relocated to Prussia in 1226, although the colonists remained in the Burzenland.

Along with the (largely Hungarian) Transylvanian nobility and the Szeklers, the Transylvanian Saxons were members of the Unio Trium Nationum, or "Union of the Three Nations", signed in 1438. This agreement preserved political rights for the three inclusive groups and excluded the largely Romanian peasantry from political life.

During the Protestant Reformation, most Transylvanian Saxons converted to Lutheranism. As the semi-independent Principality of Transylvania was one of the most religiously tolerant states in Europe, the Saxons were allowed to practice their religion. The Habsburgs promoted Roman Catholicism to the Saxons during the Counter Reformation, but the majority remained Lutheran.

Emperor Joseph II attempted to revoke the Unio Trium Nationum in the late 18th century. His actions were aimed at the political inequality within Transylvania, especially the political strength of the Saxons. Although his actions were ultimately rescinded, many Saxons began to see themselves as being a small minority opposed by nationalist Romanians and Hungarians. Although they remained a rich and influential group, the Saxons were no longer a dominant class.

During the Revolutions of 1848, the Saxons ultimately supported the Romanian majoritarian population attempt to acquire equal political standing after so many centuries of oppression. The Hungarians, on the other hand, supported complete unification of Transylvania with the rest of Hungary. Stephan Ludwig Roth, a pastor who led the German support for Romanian political rights, was executed by Hungarian radicals during the revolution.

Cultural factors are a popular explanation for European ascendancy. Max Weber, a German sociologist, thought he had the question nailed. In his book “The Protestant Ethic and the Spirit of Capitalism”, published in 1905, Weber argued that religious factors were crucial for spurring European economic growth. Weber's view centred on Calvinism—a branch of Protestantism—and argued that it encouraged Europeans to be thrifty, rational, and concerned with material gain. Such values did not exist outside Europe where, according to Weber, material wealth was not revered and entrepreneurship was seen as subversive.

Similar arguments have emerged since Weber. Thomas Sowell, at Stanford University, points to the British as responsible for no less than the invention of freedom. In Mr Sowell’s view, the British were a shining light of economic development, which other countries gradually learnt to imitate. (Fascinating new research explores a similar theory: that learning best practices from others is essential to growth and becomes harder the greater the cultural distance from economic leaders.)

But other historians reject the idea that European cultural superiority caused the Great Divergence. Rather, it was their plundering and pillage of foreign lands which was responsible. According to James Blaut, an American historian, the year 1492—when Christopher Columbus landed in America and set off centuries of European colonialism—“represents the breakpoint between two fundamentally different evolutionary epochs”. From 1492 onwards, Europe pulled in raw materials, currency and labour, and deliberately held back the rest of the world.