TABOBO, QUENNIE A.

NCBA – Master in Public Administration

Subject: MICRO-ECONOMICS AND POLICY ANALYSIS

Session 3 – The meaning and significance of “Third World” economy

THREE WORLD MODEL

The “three worlds” model of geopolitics first arose in the mid-20th century as a way of mapping the various
players in the Cold War. The origins of the concept are complex, but historians usually credit it to the French
demographer Alfred Sauvy, who coined the term “Third World” in a 1952 article entitled “Three Worlds, One
Planet.” In this original context, the First World included the United States and its capitalist allies in places such
as Western Europe, Japan and Australia. The Second World consisted of the communist Soviet Union and its
Eastern European satellites. The Third World, meanwhile, encompassed all the other countries that were not
actively aligned with either side in the Cold War. These were often impoverished former European colonies,
and included nearly all the nations of Africa, the Middle East, Latin America and Asia.

CLASSIFICATION OF COUNTRIES
 First World countries have stable democracies and are characterized by the rule of law, a capitalist
economy, and a high standard of living.
 Second World countries are more stable and more developed than third world countries but less stable
and less developed than first world countries. Investors sometimes refer to second world countries that
appear to be headed toward first world status as "emerging markets."
 Third World country is a nation characterized by relatively inferior economic statistics.

Nowadays, the above-cited terms are already outdated and political. New terminologies for the classification of
countries are used by international organizations such as International Monetary Fund (IMF) and United
Nations (UN).

Developed Countries - A developed country, industrialized country, more developed country, or more

economically developed country (MEDC), is a sovereign state that has a developed economy and advanced
technological infrastructure relative to other less industrialized nations.  Developed countries have generally
more advanced post-industrial economies, meaning the service sector provides more wealth than the industrial
sector. 

Developing Countries - A developing country (or a low and middle income country (LMIC), less developed
country, less economically developed country (LEDC), or underdeveloped country) is a country with a less
developed industrial base and a low Human Development Index (HDI) relative to other countries.

Least Developed Countries - The Least Developed Countries (LDCs) is a list of developing countries that,

according to the United Nations, exhibit the lowest indicators of socioeconomic development, with the
lowest Human Development Index ratings of all countries in the world. A country is classified among the Least
Developed Countries if it meets three criteria:

LIFE IN A DEVELOPING COUNTRY

Developing countries tend to have some characteristics in common. For example, with regards to health risks,
they commonly have:
 Life Expectancy at birth, 2015=66.6 to 72.9 years
 Life Expectancy at age 70, 2015=11.1 to 12.6 years
 Population with primary education, 2017= 66.5% to 84.9%
 Population with a tertiary education, 2017 =13.7 to 18.5%
 The UN-Habitat reports that 43% of urban population in developing countries and 78% of those in the least
developed countries are slum dwellers.
 Mobile cellular subscriptions, 2017 (per 100 inhabitants) = 90.6 to 116.7
 Fixed broadband subscriptions, 2017 (per 100 inhabitants) = 2.3 to 11.3
 They often perceive the quality of health care and education to be poor
 Climate change will hit the tropics harder first, and many developing countries are tropical. Yet developing
countries and poor communities have less capacity than their richer counterparts to adapt to climate change
and severe weather
 In developing countries women make up a large proportion of the informal sector workforce with low-
paying jobs, a structure that might perpetuate the myth of male superiority
 Child marriage
 High levels of pollution (e.g. air pollution, indoor air pollution, water pollution)
 High number of road traffic accidents; and generally poor infrastructure
 Widespread corruption at all government levels and a lack of so-called good governance
 Several forms of violence against women are more prevalent in developing countries than in other parts of
the world.
 Malnutrition in children and stunted growth of children is the cause for more than 200 million children
under five years of age in developing countries not reaching their developmental potential.
 In 2015 the World Health Organization (WHO) estimated that "1 in 3 people, or 2.4 billion, are still without
sanitation facilities" while 663 million people still lack access to safe and clean drinking water.
 About 892 million people, or 12 per cent of the global population, practiced open defecation instead of using
toilets in 2016. Seventy-six per cent (678 million) of the 892 million people practicing open defecation in the
world live in just seven countries.
 In 2009, about 1.4 billion of people in the world lived without electricity. 2.7 billion relied on wood, charcoal,
and dung (dry animal dung fuel) for home energy requirements.
 Indoor air pollution in developing nations is a major health hazard. A major source of indoor air pollution in
developing countries is the burning of biomass. Three billion people in developing countries across the
globe rely on biomass in the form of wood, charcoal, dung, and crop residue, as their domestic cooking fuel.
Globally, 4.3 million deaths were attributed to exposure to IAP in developing countries in 2012, almost all in
low and middle income countries.
 Water pollution is a major problem in many developing countries. It requires ongoing evaluation and
revision of water resource policy at all levels (international down to individual aquifers and wells). It has
been suggested that water pollution is the leading worldwide cause of death and diseases, and that it
accounts for the deaths of more than 14,000 people daily.
 Over the last few decades, global population growth has largely been driven by developing countries, which
often have higher birth rates (higher fertility rate) than developed countries.
 Increased and intensified industrial and agricultural production and emission of toxic chemicals directly into
the soil, air, and water.
 Unsustainable use of energy resources.
 High dependency on natural resources for livelihood, leading to unsustainable exploitation or depletion of
those resources
 Indebtedness

SIGNIFICANCE OF DEVELOPING COUNTRIES

South–South cooperation is a term historically used by policymakers and academics to describe the exchange
of resources, technology, and knowledge between developing countries, also known as countries of the Global
South. The Global South is making increasingly significant contributions to global development. The economic
and geopolitical relevance of many countries has grown. In the past, south-south cooperation focused on
sharing knowledge and building capacities, but the countries of the Global South and new financial institutions
have recently also become increasingly active in development finance.

TRADE INTEGRATION
Developing countries have become major players in global trade. Their relative weight has grown
enormously, mainly due to China’s meteoric rise as an exporter. Though they partly reflect surging oil prices,
increasing exports from the Middle East and North Africa (MENA), Eastern Europe, and Central Asia have
further increased the weight of developing countries in world trade. GDP projections suggest that the share of
world trade held by developing countries will expand further, more than doubling over the next 40 years and
reaching nearly 70 percent by 2050.

Developing economies in pace with world exports. Though the value of exports of goods and services from
developing countries has increased notably since 2000, this growth has not outpaced the developed world.
Developing countries’ share in global exports has not grown since 2012. The growth of global exports has
levelled off since 2012 and the same is true for the developing economies. In 2018, the total value of exports
originating from developing countries was 4.3 times higher than in 2000. Developing countries’ share of global
exports of goods and services has risen from 29.7 per cent in 2000 to 41.5 per cent in 2012 and has levelled off
since. Looking at the trade in goods, developing economies’ share in world exports of goods has plateaued at
just above 44% per cent since 2012. In the developing economies of Africa, the 2017 upswing in world trade
manifested itself in export growth; African exports increased by 18% compared with the previous year, and by
14% in 2018. In 2018, developing economies’ share of world services exports (US$5.8 trillion) was 29.7 per
cent (US$1.7 trillion), while exports from developed economies were valued at US$4.0 trillion. Since 2000,
growth has been significant when they accounted for 21 per cent (US$0.35 trillion). The top five services
exporters, China, India, Singapore, Hong Kong SAR and the Republic of Korea, account for half of developing
economies’ services exports.

The Food and Agriculture Organization of the United Nations estimates that by 2030 meat production will
increase another 19% from that in 2015–2017, with developing countries accounting for almost all the
increase. Milk production is projected to grow 33% in the same period. Even though developing countries will
drive future growth in meat production, the world’s richer countries eat meat most intensively, and this is
expected to continue well into the future.

Tourism makes a significant contribution to developing economies. One of the most important drivers of
trade in travel services is international tourism. In addition to the direct service itself, tourism can create large
multiplier effects for the domestic economy. It promotes growth and employment in a multitude of economic
sectors such as domestic transportation, hotels and restaurants, financial services, cultural services and many
others. It also attracts investment and promotes the development of the private sector. This is the reason why
UNCTAD has recognized that touristic services, if properly harnessed, can become an important engine for
inclusive growth and sustainable economic growth in developing countries. The contribution of tourism to the
global economy is forecast to increase. The annual growth rate of worldwide arrivals of international tourists, a
volume indicator for this sector, have been close to 5 per cent or more since 2010. The UNWTO estimates that
this indicator increased by 5.6 per cent in 2018 and will continue to grow at 3-4 per cent in 2019. A similar
evolution is expected over the 2030 horizon.

A new round of negotiations would raise global growth prospects and strengthen the international trading
system. The IMF considers a successful trade round to be an important step toward meeting the goal of making
globalization work for the benefit of all.

REFERENCES:
 Ali, S. and Stancil, B. Developing Countries Changing the World of Trade. Retrieved from https://carnegieendowment.org/2009/11/19/developing-
countries-changing-world-of-trade-pub-24190
 Andrews, W. August 2018. First, Second or Third World?. Retrieved from https://www.history.com/news/why-are-countries-classified-as-first-
second-or-third-world
 Banton, C. November 2019. Third World. Retrieved from https://www.investopedia.com/terms/t/third-world.asp
 Chen, J. April 2019. Second World. Retrieved from https://www.investopedia.com/terms/s/second-world.asp
 Ghosh, S. March 1996. Reverse Linkages: The Growing Importance of Developing Countries.
 United Nations Development Programme. 2019. Human Development Report 2019; Beyond income, beyond averages, beyond today: Inequalities in
human development in the 21st century.
 International Monetary Fund
 Kenton, W. September 2019. First World. Retrieved from https://www.investopedia.com/terms/f/first-world.asp
 SDG Pulse. Developing economies in international trade. Retrieved from https://sdgpulse.unctad.org/developing-economies-in-international-trade/
 Wikipedia. Developing Country. Retrieved from https://en.wikipedia.org/wiki/Developing_country