Thanks for the interesting question! I'm so sick of the "Dorothy's House was an Inside Job" questions.

You might be interested in a book by Jared Diamond called Guns, Germs, and Steel. It addresses the mytho-historical conquest of a region called "Amerika" by curiously pale people from across a large ocean. The peoples of Amerika were doomed to fall because of their inferior technology. This was not because they were incompetent oafs who were not active agents during their own conquest (since that's racist), but because of their geography. The land where these so-called "Inca" and "Maya" lived determined their eventual fates.

This is the same case with the witches of Oz. There have been several attempts to dramatize the divergence of the witches' alignments, most notably Gregory Maguire semi-autobiographical work Wicked. But this, and its stage adaptation, are pure pop history and rather revisionist, written for the entertainment of the masses. Solid geographical theory says otherwise.

Let's first go back to correct some history. The preeminent Oz scholar L.Frank Baum records a time when Wicked Witches ruled all four quadrants of Oz, subduing the Munchkins in the west, the Quadlings to the south, the Winkies to the east, and the Gillikins to the north. Glinda the Good Witch, Oz's most powerful sorcerer actually overthrew the old tyrant in the South and installed the Good Witch of the North herself. Regardless, good evidence exists that these Good Witches were native to their own lands, and the Wicked Witches all originated in the east of west.

So back to theory. In Diamond's book, he proposes that this land across the sea, which some call "Asia" or maybe "Europe" (though some cryptic tomes from its early history say "Middle Earth"), was particularly wide. Much of it existed in similar biomes, and this accelerated trade, exchange of ideas, and technological development. The same can be said to have occured in Oz. Across the east-west axis, trade and exchange thrived at some time prior to Oz's unification. This wealth got to the heads of the residents, and they became increasingly cunning and manipulative. Natural selection played its course, except here it was "survival of the wickedest." (This also led to the development of the traditional [pointed cap](http://upload.wikimedia.org/wikipedia/commons/thumb/9/93/Wicked_Witch_of_the_West.png/100px-Wicked_Witch_of_the_West.png of these regions. It was an attempt to compensate for lack of height that correlates with wickedness. Archaeological excavations near Munchkin town show that earlier hats were significantly shorter, while analysis of various femurs suggests taller individuals.) Wicked witches from the east and west soon conquered the less developed regions of the north and south, before installing the Wizard of Oz as a single ruler to justify their colonialism. Local revolutions installed the Good Witches of the North and South. These indigenous rulers represent an earlier stage in Oz history before Easter and Western civilization introduced evil things like flying monkeys, the green skin beauty standard unattainable by white natives, and capitalism.

TL;DR It has to do with geography. The east west were better suited for trade and development and accumulate wealth, and with it greed. Wicked Witches were selected for and conquered their neighbors. Only the primitive, inherently noble Good Witches on the North and South could overthrow them.

I suspect you might be onto something

Varying account create a very confusing picture of what exactly a "witch" is. In short, no direction does not play a part in whether a witch is good or bad. It is important as to whether someone obtained the title of "Wicked."

The unfortunate thing about Oz is that almost all historical records come from historian L. Frank Baum. While a charming writer who chronicled many important moments in history, he was short on details and extremely biased. We know G(a)linda did exist, as well as the Witch of the West (Baum never mentioned her name). There is less direct knowledge of the Scarecrow or the Tinman however. Baum chose to ignore the large racial tensions in Oz which are well documented in the Lollipop Guild Histories. Interesting fact, while the Guild has a silly name it was actually a Union formed in response to the terrible conditions munchkin workers faced in Lollipop factories in Munchinland. The Guilds records are one of the only historical documents which go into much detail about anti-munchkin prejudices even though this is considered common knowledge.

Unfortunately, the only more detailed account of the "Witches" comes from the apocryphal "Life and Times of the Wicked Witch of the West." This gives us names for the Wicked Witches of the both the East (Nessarose) and the West (Elphaba). Though whether these are real names (Elphaba might be a play on L. Frank Baum), or simply an attempt to humanize these characters is unknown. The Life does however document numerous historical events and places that Baum left out, such as Madame Morrible, the Shiz University, as well as anti-Animal sentiment that was present throughout much of Oz. We can never be certain whether the Life is merely historical fiction or in fact a true account of the infamous Wicked Witch of the West, but again there are historical events that we know happened documented in the book so it has some accuracy.

What really matters though, is whether a witch is good or bad. The history of magic itself in Oz is very shaky and misunderstood and the title of Witch seems more likely to be attempt to discredit the social and political advances fought for by Glinda, Elphaba, Nessarose, and Locasta (who does not feature at all in Life but appears in later editions of Baum's vast documentary of Oz). Even Dorothy is categorized as a Witch though it is now accepted that she was simply a foreigner with bad luck. We can never know for certain how much impact any of these women had on the current political climate of Oz, aside from Glinda. However, without a doubt Galinda has created a time of greater coexistence among the races of Oz and a massive decrease in violence throughout the land.

Categorizing them as Wicked seems more to be a political ploys to discredit the social movements that have led to increased acceptance and tolerance throughout Oz.