Third World
Countries that are generally classified poor or developing
Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.
What is “Third World”?
The modern definition of “Third World” is used to classify countries that are poor or developing. Countries that are part of the “third world” are generally characterized by (1) high rates of poverty, (2) economic and/or political instability, and (3) high mortality rates.
Historical Definition of “Third World”
The use of the term “Third World” initially arose during the Cold War and was used to define countries that did not align themselves with the North Atlantic Treaty Organization (NATO) or the Warsaw Pact. In other words, the term was used to classify countries that did not pick a faction during the Cold War. Countries that aligned with NATO were considered part of the “First World,” while countries that aligned with the Warsaw Pact were part of the “Second World.”
After the fall of the Soviet Union in 1991, the term “Third World” changed considerably. Today, the term is used to represent economically poor or non-industrialized countries. Going by the historical definition of “Third World,” countries such as Finland, Switzerland, Ireland, and Austria would be classified as such. However, following the modern definition of the term, it would be untrue.
Controversy in Using the “Third World” Designation
There’s been a lot of controversy regarding the use of the term “third world” to describe certain countries, as it may indicate a lower level of geopolitical significance compared to countries in the or “First World” or “Second World.” For example, a country that is part of the “First World” is not necessarily better in every way than a country in the “Third World.” Instead, the terms “developing countries” or “least developed countries” are increasingly used in place of the term “Third World.”
Additional Resources
CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:
Financial Analyst Certification
Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes!
