# "Third World" Countries: Definitions, Criteria, and Modern Classifications

![Illustration of a figure holding a pitchfork facing a cityscape with the term Third World and its definition displayed](https://www.investopedia.com/thmb/Sch0PZKg1TyzkhXNU3jZfGbQTAg=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Third_World_Final-33c2b68333d542b3b507db337012b8e9.jpg)

*Alfred Sauvy coined "Third World" to describe nations not aligned with the First World (capitalist) or Second World (communist) during the Cold War. — Investopedia / Candra Huff*

> **Definition**
>
> A “third world" country is an outdated term once used for nations not aligned with major Cold War powers, now commonly, though imprecisely, used to describe developing or low-income countries.

## What Is the Third World?

Historically, "Third World" referred to economically underdeveloped nations that were unaffiliated with world superpowers during the Cold War. This classification, now considered outdated and derogatory, grouped countries based on economic standing into First, Second, Third, and Fourth World categories. Currently, terms like "developing," "underdeveloped," or "low- and [middle-income country (LMIC)](https://www.investopedia.com/terms/m/middle-income-countries.asp)" are favored to describe these nations' economic conditions more accurately.

### Key Takeaways

*   The term "Third World" is outdated and considered offensive, now replaced by terms like "developing" or "low-income" countries.
*   Alfred Sauvy coined "Third World" to describe nations not aligned with the First World (capitalist) or Second World (communist) during the Cold War.
*   Today, nations are more commonly categorized as developed, emerging, or frontier markets based on their economic characteristics.
*   The World Trade Organization and other international bodies provide frameworks for understanding and classifying nations based on development and income levels.

## Characteristics of Developing Nations

Classifying countries as First, Second, Third, and Fourth World was a concept that was created soon after the end of World War II in 1945 and used until the collapse of the Soviet Union in 1991.

Nations are often characterized by their economic status and key economic metrics like [gross domestic product](https://www.investopedia.com/terms/g/gdp.asp) (GDP), GDP growth, GDP per capita, employment growth, and [unemployment rate.](https://www.investopedia.com/terms/u/unemploymentrate.asp) In developing countries, low production rates and struggling labor market characteristics are usually paired with relatively low levels of education, poor infrastructure, lack of sanitation, limited access to health care, and lower costs of living.

Developing nations receive attention from the [International Monetary Fund](https://www.investopedia.com/articles/03/030703.asp) (IMF) and the [World Bank](https://www.investopedia.com/terms/w/worldbank.asp), which offer grants and loans to help improve their infrastructure and economies.

Both organizations refer to these countries as lower-middle or low-income countries.

Developing nations, or LMICs, interest investors looking for growth opportunities due to their high risks and returns. Although they often underperform economically, innovation and industrial advancements can drive rapid improvements.

## Evolution of Global Economic Classifications

The terms First World and Third World originated during the Cold War. First World countries were industrialized and aligned with NATO and [capitalistic](https://www.investopedia.com/terms/c/capitalism.asp) views.

Second-world countries had [communist](https://www.investopedia.com/terms/c/communism.asp) systems, and most were allied with the Soviet Union. These included the Soviet satellite states in Eastern Europe and some Asia nations.

Third World countries referred to Asian and African nations not aligned with the U.S. or the Soviet Union.

Now, in part because the Soviet Union no longer exists, the definition of Third World is outdated and may be considered offensive.

### Alfred Sauvy Coined the Term

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 of them former colonies, that did not share the ideological views of Western capitalism or Soviet socialism.

Sauvy wrote "Three worlds, one planet" in a 1952 article for _L'Observateur._.

## Global Economic Hierarchies

Today, most nations are classified as developed, emerging, or frontier. The old world segmentations mostly fit into these categories.

The developed countries are the most industrialized with the strongest economic characteristics. The [emerging market](https://www.investopedia.com/terms/e/emergingmarketeconomy.asp) countries demonstrate significant strides in various economic growth areas, though their metrics are not as stable. Frontier markets often mirror the old Third World classification and show the lowest economic indicators.

## Countries in the Frontier Markets Category

MSCI’s Frontier Markets Index can serve as a list of developing countries. The index includes the following countries:

*   Croatia
*   Estonia
*   Iceland
*   Lithuania
*   Kazakhstan
*   Romania
*   Serbia
*   Slovenia
*   Kenya
*   Mauritius
*   Morocco
*   Tunisia
*   Latvia
*   WAEMU (West African Economic and Monetary Union)
*   Bahrain
*   Jordan
*   Oman
*   Bangladesh
*   Pakistan
*   Sri Lanka
*   Vietnam

## Alternative Classifications for Developing Economies

The World Trade Organization offers another classification system, dividing countries into developing and least developed. Without set criteria, countries self-nominate, but other nations can contest their status.

Each WTO classification offers nations opportunities. Their projects aim to boost trading and improve infrastructure.

### List of Least Developed Countries (LDCs)

As an offshoot of the WTO, the [Human Development Index](https://www.investopedia.com/terms/h/human-development-index-hdi.asp) (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 education, life expectancy, and gross national income per capita.

The World Health Organization and the United Nations use Least Developed Countries (LDC) to describe a set of 44 countries with low socioeconomic development indicators. This list is reassessed every few years.

The indicators are a combination of gross national income, human assets (nutrition, life expectancy, secondary school education, adult literacy), and economic vulnerability (population size, remoteness, merchandise export concentration, agriculture, exports, and natural disaster preparedness).

*   Afghanistan
*   Angola
*   Bangladesh
*   Benin
*   Burkina Faso
*   Burundi
*   Cambodia
*   Central African Republic
*   Chad
*   Comoros
*   Democratic Republic of the Congo
*   Djibouti
*   Eritrea
*   Ethiopia
*   Gambia
*   Guinea
*   Guinea-Bissau
*   Haiti
*   Kiribati
*   Lao People's Democratic Republic
*   Lesotho
*   Liberia
*   Madagascar
*   Malawi
*   Mali
*   Mauritania
*   Mozambique
*   Myanmar
*   Nepal
*   Niger
*   Rwanda
*   Senegal
*   Sierra Leone
*   Solomon Islands
*   Somalia
*   South Sudan
*   Sudan
*   Timor-Leste
*   Togo
*   Tuvalu
*   Uganda
*   United Republic of Tanzania
*   Yemen
*   Zambia

## What Is the Third World?

The phrase Third World was used to characterize nations that existed outside the economic and political ties that bind the industrialized countries around the world. Many are former colonies of European nations.

The term Third World is today considered pejorative. A nation might now be considered developing or frontier. A developing nation is intent on improving the infrastructure, education system, health system, and trade ties that are necessary to improve living standards. A frontier nation might be just beginning that process.

The UN labels some nations as "least developed," previously known as the Fourth World. These countries remain isolated from global economic systems, technology, and politics.

## What Is the First World?

The term First World collectively means the highly industrialized nations with capitalist economies. Although the term is largely outdated, the list of First World nations today would include Japan as well as the nations of North America and Western Europe. It might arguably also include some Eastern European, South American, and Asian nations.

## What Is a Frontier Nation?

The term frontier nation is used primarily by investment professionals who specialize in international investing. It describes a nation that seems poised for fast economic development. Investments in these countries are seen as offering potentially high rewards at substantially high risk.

## The Bottom Line

The term 'Third World' is an outdated and offensive relic of the Cold War era, initially used to describe nations not aligned with either the capitalist First World or the communist Second World. Today, more appropriate terms like "developing," "low-income," and "frontier" countries better represent these nations' statuses and growth prospects. Understanding these classifications helps investors navigate economic opportunities and challenges in low- and middle-income countries. Recognizing this evolution empowers readers to approach the topic with respect and informed context, acknowledging the dynamic nature of global economic development.

> **Article Sources**
>
> 1.  International Monetary Fund. "[Factsheet-The IMF and The World Bank](https://www.imf.org/en/About/Factsheets/Sheets/2016/07/27/15/31/IMF-World-Bank)."
>     
> 2.  Marcin Wojciech Solarz. "[‘Third World’: The 60th Anniversary of a Concept That Changed History](https://www.tandfonline.com/doi/abs/10.1080/01436597.2012.720828)." Third World Quarterly, 2012.
>     
> 3.  MSCI Inc. "[MSCI Announces the Results of the 2025 Annual Market Classification Review](https://www.msci.com/our-solutions/indexes/market-classification)."
>     
> 4.  International Monetary Fund. "[West African Economic and Monetary Union (WAEMU) Documents](https://www.imf.org/en/Publications/SPROLLs/WAEMU-362#sort=%40imfdate%20descending)."
>     
> 5.  World Trade Organization. "[Who Are the Developing Countries in the WTO?](https://www.wto.org/english/tratop_e/devel_e/d1who_e.htm)"
>     
> 6.  United Nations. "[List of Least Developed Countries (as of 19 December 2024](https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/ldc_list.pdf)."
>     
> 7.  World Health Organization. "[Least Developed Countries Health and WHO Country Presence Profile](https://apps.who.int/iris/bitstream/handle/10665/255802/WHO-CCU-17.07-eng.pdf;jsessionid=EA2CACEBF1259A083DFE622B27042B02?sequence=1)."