The origin of modern Hungarian goulash is a soup that shepherds made while herding their flocks across the Great Plain of Hungary. For that reason the word "goulash" stems from the Hungarian word "gulyás," which originally meant herdsman.
As early as the ninth century, nomadic Magyar herdsmen were roaming around the Great Plain with their sheep. One method of food preparation for them was to slowly stew cubes of meat in an iron kettle over an open fire. They kept cooking the meat until all the liquid evaporated. They then dried the meat in the sun to create a kind of jerky for traveling.
When they wanted to eat the meat, they reconstituted it by cooking it in liquid with whatever ingredients were on hand. If they added extra liquid, they called it a "goulash soup."
No one spiced goulash with paprika until after the Turkish occupation of Hungary from 1526 to 1699. This is when the Turks introduced spices such as paprika to the national palate. The shepherds began spicing their goulash soup with paprika.
Toward the end of the 19th century, Hungarians were under Habsburgs rule. The people wanted to preserve their own national identity. Part of this movement included preserving national dishes such as goulash. From that time on Hungarian goulash was no longer just the food of herdsmen but of all Hungarians.