What Is Poverty? - Classifying Countries By Level Of Economic Development

In addition to the above definitions and measurements of poverty, countries are classified by how "developed" they are economically. During the cold war—the period of escalating tensions between the United States and the Soviet Union that lasted from the 1950s until the Berlin Wall was dismantled in 1989—the terms "first world," "second world," and "third world" came into use. Originally, third-world countries were those that did not align themselves with either the first-world United States and its Western allies or the second-world Soviet Union and other Eastern bloc countries. Over time, however, the term "first world" came to refer to those countries that were industrialized and relatively wealthy, while "third world" was used to describe countries that were poor, indebted to other nations, and not industrialized.

With the end of the cold war and the dissolution of the Soviet Union in the late 1980s and early 1990s, the term "second world," which was rarely used to begin with, was abandoned. "First world" came to refer to all countries that are industrially and technologically developed, while "third world" described poor countries that are largely undeveloped. However, the idea of a third world was considered derogatory—as if poor countries were hopelessly removed from the rest of the world when in fact their people make up at least two-thirds of the planet's population.

Instead, academics and researchers began using the terms "developed," "developing," and "underdeveloped" to describe rich, industrialized countries, countries whose economies are expanding, and those that remain poor and without large-scale industry or technology, respectively. Still others prefer "least developed countries," "majority world" or "two-thirds world" when discussing countries that belong to the poorest segment of the global economy. The term "fourth world" is sometimes used to describe either the very poorest social or economic groups within underdeveloped countries or indigenous or marginalized people within any country.

As there is still no widespread consensus about which terms to use, this book will give preference to "developed," "developing," and "underdeveloped" to discuss the three main categories of world economic development.