Third World Countries: Meaning, Criteria, and List

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A third world country is an outdated Cold War label. It first meant nations that sided with neither the U.S.-led Western bloc nor the Soviet bloc. Today it is loosely used to mean a poor or developing country, but no official body classifies countries as “Third World.” The closest measurable equivalent is the World Bank’s income classification. This ranking uses it: the 72 countries here fall in the World Bank’s low income or lower middle income groups, ordered from the highest GDP per capita to the lowest.

What Third World Meant, and What It Means Now

The three-world model came out of the period after World War II ended in 1945 and lasted through the Cold War. It divided countries by political alignment, not by income:

• First World: industrialized, capitalist countries aligned with NATO and other Western powers, such as the U.S., Canada, Western Europe and Japan.
• Second World: communist states, most of them allied with the Soviet Union, including the Soviet satellite states of Eastern Europe and some Asian nations.
• Third World: countries, mostly in Asia, Africa and Latin America, that belonged to neither bloc. Many were former colonies.

Because many nonaligned countries were also poor, “Third World” gradually came to mean “underdeveloped.” After the Soviet Union collapsed in 1991, the Second World disappeared, and the original political meaning lost its basis. The term is now widely considered imprecise and often derogatory. Economists, international lenders and investors use developing country, low-income country, or low- and middle-income country (LMIC) instead.

Alfred Sauvy Coined the Term

French demographer Alfred Sauvy is credited with the phrase, from a 1952 article in L’Observateur titled “Three worlds, one planet.” It described countries, many of them former colonies, aligned with neither Western capitalism nor Soviet socialism, echoing the “Third Estate” of revolutionary France.

Under that original definition, India counted as Third World for its nonaligned foreign policy, not its income. Whether India is a third world country therefore depends on which meaning you use.

How This List Is Built and Ordered

Two separate measures do two separate jobs here.

Which countries are included depends on the World Bank income group. The World Bank assigns each economy to one of four groups (low, lower middle, upper middle, high) using gross national income (GNI) per capita, calculated with the Atlas method. The Atlas method converts GNI to U.S. dollars using an exchange rate averaged over three years and adjusted for inflation differences, which smooths out short-term currency swings. The group thresholds are revised each year for the World Bank’s new fiscal year, so a country near a boundary can move up or down. Only countries in the two lowest groups appear in this ranking.

The order within the list follows GDP per capita: gross domestic product divided by population. GDP counts the value produced inside a country’s borders. GNI adds income residents earn from abroad and subtracts income sent out to foreign owners. For most countries the two are close, but they can diverge noticeably:

• Lesotho is classified lower middle income yet sits at 53rd, with GDP per capita of $1,089. That is below several low-income countries ranked above it, such as Uganda ($1,206) and Mali ($1,193). Its income group comes from GNI, its rank from GDP, and the two measures tell slightly different stories.
• Guinea-Bissau and Rwanda share the same GDP per capita, $1,124, at 51st and 52nd.
• North Korea (Korea, Dem. People’s Rep.) is classified low income but has no GDP per capita figure, so it is placed last rather than ranked on a number.

Two limits apply when reading the order. A higher rank means more output per person, not a better quality of life, lower poverty or a more stable economy. GDP per capita is also an average. It says nothing about how income is distributed inside a country.

What the Ranking Shows

The income split. Of the 72 countries, 47 are lower middle income and 25 are low income. Apart from Lesotho, every lower-middle-income country ranks above every low-income one, from Bolivia at 1st through Nigeria at 46th. Low-income countries run from Uganda at 47th to Burundi and North Korea at the bottom.

The spread. Bolivia’s GDP per capita of $5,148 is about 22 times Burundi’s $234.

Regional concentration. Sub-Saharan Africa accounts for 41 of the 72 countries and 21 of the 25 low-income ones. The other four low-income countries are Syria, Yemen and Afghanistan in the World Bank’s Middle East, North Africa, Afghanistan and Pakistan region, plus North Korea in East Asia and Pacific. Latin America and the Caribbean appears only in the upper part of the list: Bolivia, Honduras, Venezuela, Nicaragua and Haiti are all lower middle income.

Size is a separate question. Per-person figures hide scale. India, ranked 24th, has a population of 1.46 billion. Egypt, 18th, has 118.4 million. Both are far larger than Bhutan (797,000) or Sao Tome and Principe (240,000), which rank higher. For total economic size, see the largest economies in the world by GDP.

Is a Specific Country a Third World Country?

In modern usage, the defensible way to answer is to check the World Bank income group. For countries often asked about:

• India: lower middle income, GDP per capita $2,702, ranked 24th. It was also a leading nonaligned nation, so it fits both the Cold War meaning and the modern income-based meaning.
• Bangladesh: lower middle income, $2,597, ranked 26th.
• Pakistan: lower middle income, $1,596, ranked 39th.
• Nepal: lower middle income, $1,536, ranked 40th.
• Egypt: lower middle income, $3,086, ranked 18th.
• Ghana: lower middle income, $3,257, ranked 14th.
• Honduras: lower middle income, $3,598, ranked 12th.
• Nigeria: lower middle income, $1,224, ranked 46th, the lowest GDP per capita among lower-middle-income countries except Lesotho.
• Rwanda: low income, $1,124, ranked 52nd.

Malaysia, Jamaica, Argentina and Serbia do not appear among the 72 countries. The World Bank does not place them in the low or lower middle income groups, so by this income-based standard they are not “third world.” Being outside this list does not make a country “developed,” though. The upper-middle-income group sits between this list and the high-income countries. For the full split, see developed vs. developing countries.

Other Ways Countries Are Classified

The World Bank’s income groups are only one system. Others answer different questions, and a country can rank low on one and moderate on another.

Developed, Emerging and Frontier Markets

Investors usually sort countries into developed, emerging and frontier markets. Frontier markets are smaller and less accessible, offering high potential returns at substantially higher risk.

Frontier status is not the same as low income. Index provider MSCI bases its frontier classification on market size, liquidity and access for foreign investors. Its frontier lineup has included countries such as Kenya, Senegal, Morocco and Benin, which appear in this ranking, alongside Iceland, Croatia, Bahrain, Oman and Serbia, which do not.

Least Developed Countries (LDCs)

The United Nations maintains a list of Least Developed Countries, recently numbering 44, which the World Health Organization also uses. Countries are assessed against three criteria:

1. Gross national income per capita.
2. Human assets: nutrition, life expectancy, secondary school enrollment and adult literacy.
3. Economic vulnerability: factors such as population size, remoteness, merchandise export concentration, reliance on agriculture and exposure to natural disasters.

The list is reviewed every few years, and countries can graduate from it. Many countries in this ranking are LDCs, including Afghanistan, Bangladesh, Ethiopia, Haiti, Nepal and Yemen. Because the LDC test goes beyond income, it does not line up one-to-one with the World Bank’s groups.

Human Development Index (HDI)

The UN’s Human Development Index ranks countries on three dimensions: education, life expectancy and GNI per capita. It is a broader measure of well-being than income alone, which is why two countries with similar GDP per capita can sit far apart on the HDI.

WTO Developing Country Status

The World Trade Organization divides members into developing and least developed countries. It sets no fixed criteria for “developing”: members designate themselves, and other members can challenge that claim. The status gives access to certain trade provisions and technical assistance programs aimed at building trade capacity and infrastructure. As a result, WTO status can differ from a country’s World Bank income group.

Why the Classification Matters Financially

Income group affects what financing a country can get. The IMF and the World Bank direct grants, concessional loans and technical support to low- and lower-middle-income countries to fund infrastructure and economic development.

For investors, LMICs and frontier markets offer growth potential alongside higher risk. Political instability, currency swings and thin markets can produce large losses as well as large gains.

FAQs

The Bottom Line

Anyone asking whether a country is "third world" gets a clearer answer from its World Bank income group than from the old Cold War label. A higher rank means more output per person, not a better quality of life or a more even spread of income. Investors weighing these economies should expect growth potential alongside higher risk from political instability, currency swings and thin markets.