What Is Third World?

"Third World" is a phrase that can be used to describe a class of economically inferior nations. Historical observations have developed a four-part segmentation for dividing the world’s economies by economic status. Third World falls behind First World and Second World but is ahead of Fourth World though Fourth World countries are hardly recognized at all.

Understanding Third World Countries

There can be a few ways to divide up the world for purposes of economic segmentation. Classifying countries as First, Second, Third, and Fourth World is a concept that was created during and after the Cold War which ran from approximately 1945 to the 1990s.

In general, nations are typically characterized by economic status and key economic metrics like gross domestic product (GDP), GDP growth, GDP per capita, employment growth, and an unemployment rate. Third World countries typically have inferior results to First World and Second World countries in these areas. In these countries, inferior production and labor market characteristics are usually paired with relatively low levels of education, poor infrastructure, improper sanitation, limited access to health care, and lower costs of living.

Third World countries are often among those on close watch by the International Monetary Fund (IMF) and World Bank which seek to provide global aid for the purposes of projects that help to improve infrastructure and economic systems comprehensively. Third World countries can also be the target of many investors seeking to identify potentially high returns through possible growth opportunities though risks are also relatively higher. While Third World countries are generally characterized as inferior economically, innovative and industrial breakthroughs can lead to substantial improvements in a short amount of time.

Key Takeaways

  • A Third World country is a nation characterized by relatively inferior economic statistics.
  • The countries known as Frontier Markets can often be synonymous with Third World. 
  • The International Monetary Fund, World Bank, and World Trade Organization may allow for certain benefits and contractual term provisions for countries that meet certain types of economic status classifications.

History of Third World

Despite its evolved usage in the modern-day, the classification of nations into worldly segments emerged during and after the Cold War. First World countries were the most highly industrialized-also the countries whose views aligned with the North Atlantic Treaty Organization and capitalism. Second World countries supported communism and the Soviet Union. Most of these countries were formerly controlled by the Soviet Union. Many countries of East Asia also fit into the Second World category. Third World countries included nations mostly in Asia and Africa that were not aligned with either the United States or the Soviet Union. The United States was considered a member of the First World and Russia was considered a member of the Second World. Now, because the Soviet Union no longer exists, the definition of Third World is less precise within the historical parameters.

Alfred Sauvy

Alfred Sauvy, a French demographer, anthropologist, and historian, is credited with coining the term Third World during the Cold War. Sauvy observed a group of countries, many former colonies, that did not share the ideological views of Western capitalism or Soviet socialism. "Three worlds, one planet," wrote Sauvy in a 1952 article published in L'Observateur.

Dividing the World

In the modern-day, most countries on Earth fall into one of three general categories known as developed, emerging, and frontier. The world segmentations have somewhat migrated to fit within these categories overall. Developed, emerging, and frontier follows similar standards for segment inclusion. The developed countries are the most industrialized with the strongest economic characteristics. The emerging countries are classified as such because they demonstrate significant strides in various economic growth areas though their metrics are not stable. The frontier markets closely mirror the Third World classification. These countries are the most inferior economically to the First World and Second World nations though they do generally get more attention than Fourth World countries.

3rd World Countries List

Because the evolutions of the worldly segmentations have become somewhat historic and obsolete, the definition or classification of a third world country is not necessarily precisely defined.

As such, one of the best barometers for assessing a list of Third World countries is MSCI’s Frontier Markets Index. This Index includes the countries of:

  • Croatia
  • Estonia
  • Lithuania
  • Kazakhstan
  • Romania
  • Serbia
  • Slovenia
  • Kenya
  • Mauritius
  • Morocco
  • Nigeria
  • Tunisia
  • WAEMU
  • Bahrain
  • Jordan
  • Kuwait
  • Lebanon
  • Oman
  • Bangladesh
  • Sri Lanka
  • Vietnam

The World Trade Organization (WTO), also provides another point of reference. The WTO divides countries into two classes: developing and least developed. There are no criteria for these classifications so countries self-nominate, though statuses can be contested by other nations.

The WTO segregation comes with certain rights for developing country status. For example, the WTO grants developing countries longer transition periods before implementing agreements that aim to increase trading opportunities and infrastructure support related to WTO work.

As an offshoot of the WTO, the Human Development Index (HDI) is another economic status metric developed by the United Nations to assess the social and economic development levels of countries. The HDI measures and then ranks a country based on schooling, life expectancy, and gross national income per capita.