FIRST WORLD AND

THIRD WORLD COUNTRIES

Classification

First World Countries(developed countries): are a small group of rich industrialized countries. Eg: USA, Canada, France, Italy, UK …

Second World Countries: it referred to the former communist countries of Eastern Europe and the USSR.

These countries are called transitional economies.

Third World Countries(developing or least developed countries): a large group of countries in Asia, African and Latin America which have lower incomes than first world countries.

Third world countries differ in themselves and further divided into groups.

The poorest countries are called Forth World countries or low income countries or least developed countries

Third world countries are known as middle income countries

Fast growing middle income countries are called emerging economies as they are emerging to take place amongst the developed countries of the world. . Eg: Mexico, Thailand, Malaysia

Countries such as South Korea, Singapore, Taiwanand others are called newly industrialized countries(NICs)or Tiger Economies as now their economies have a strong, Western-style, industrialized base.

Brazil, Russia, India and China are called BRIC countries as it is forecasted that by 2050, they will be four of the most dominant economies in the world.

First World Country Third World Country

Problems in the Third World Countries

Per Capita Income:

Third world countries have lower per capita income.

84 % of the world’s population lived in the Third World in 2006, yet the total GNP of the Third world is only 22%.

First world with 16 % of the population enjoys 78% of world GNP.

• Physical capital

Third World countries have far less physical capital per capita than First World countries.

They are poor infrastructure as weak in physical capital.

A country tends to be less developed:

o The fewer the number of telephone mainlines per person

o The lower the % of roads that are paved

o The fewer the % of the population with access to improved sanitation facilities

oThe less agricultural land irrigated

oThe less ability it has to generate electricity.

oPhysical capital is important because the more physical capital, the greater the productive potential of the economy.

• Human capital

Developing countries have lower levels of human capital than developed countries.

The percentage enrolment on different stages of education:

Least developed countries would expect to have the lowest proportions of the total age group enrolled in education.

Country Primaryenrolment

Secondary enrolment

Ethiopia 61% 99%

UK 28% 95%

The percentage of primary school children who finish their schooling once they have started:

In most countires , children repeat their year of schooling if they fail to make sufficient progress “ if they fail”

Country % of students starting primary school reaching the final year in class in primary school

Malawi 42%

UK 100%

Literacy rates:

Lack of schooling impacts on literacy rates.

Country Adult literacy rates

(age 15 and over, females)

Adult literacy rates ( age 15-24 and over,

females)

Ethiopia 23 39

Mozambique 25 37

Malawi 54 71

Cont………….

Education levels are vital to the ability of countries to grow in future.

Countries which invest today in education, particularly primary education, shows that rates of return on the investment are highest and are likely to grow in future.

In recent years , there has been growing interest in female education.

In developing countries , females are less likely to receive formal education than males.

However it is argued that the rate of return on educating females is higher than males.

A woman who can read and write is far more likely to pass on these skills to her children and grand children than man.

Women also have the primary responsibility for the nutrition and health care of family units.

Literate women are able to take part in family planning programs.

• High population growth

Third world countries have had relatively high rates of population growth compared to first world countries.

This has two problems:

They need to invest large amounts in both physical and human capital in order to create the goods and services and jobs need for their growing populations.

It means they have to forgo some consumption and invest more but it is not possible as high population means more consumption.

High population growth brings high dependency ratios.

• Health and mortality

Third World countries on average enjoy poorer health and are likely to die younger than in First World countries people.

Poor health and high mortality is caused by several factors:

The standard of nutrition of individuals:

Poor nutrition is a major contributor to ill health and high mortality rates.

Poor nutrition also affects both the physical and mental development of individuals.

It also affects educational performance

Nutrition in third world countries

Nutrition in first world countries

The physical infrastructure of the country:

Access to clean water is vital for health.

Also clean environment is vital for health.

Large number of people die from water-borne diseases and diseases carried by animals such as malaria.

In first world these diseases have been eliminated through proper infrastructure or control of the natural environment.

Infrastructure in third world

Infrastructure in first world

The working environment:

• People often are forced to work in poor conditions which severely damage their health.

• Many start work at a much younger age than in first world countries.

Health care provision is poor:

• Low and middle income countries tend to have less health staff relative to their population than high income countries.

Third world health care First world health care

Country Life expectancyat birth, years

Prevalence of malnutrition. % of children under weight

Under-5 mortality Rate per 1000, Live births

One year Olds fullyImmunizedAgainst measles

Births attendedbySkilled health staff % of total

Malawi 46 22 125 82 56

Ethiopia 52 38 127 59 6

Mozamb

ique

43 24 145 77 48

UK 79 0 6 82 100

USA 78 2 7 93 99

• Unemployment and underemployment

Third world countries tend to have much higher unemployment and underemployment than first world countries.

Reasons:

Lack of physical capital:

Without the machines, factories and offices, workers are structurally unemployed.

Also poor government economic policies and protectionism can play a role in that.

In countries heavily reliant on agriculture, unemployment is highly seasonal.

• Structure of the economy

Growth and development alters the structure of output in the economy.

Developed countries have gradually shifted from primary to secondary and then tertiary production over time.

Primary Secondary Tertiary

Distribution of Gross Domestic Product(%)

Country Agriculture Industry Services

Malawi 36 20 45

Ethiopia 48 13 39

Tanzania 45 17 37

UK 1 26 73

USA 1 22 77

Singapore 0 35 65

• Institutional structures, governance and corruption

Developed countries have a complex

system of institutional structures.

They have well-developed legal systems which protect private property and trade transactions.

They have sophisticated financial systems which give opportunities to most citizens to save, borrow and transfer money.

Government is relatively efficient.

There will be some level of corruption but this will be low.

Developed economies tend to have established democracies.

Developing countries range widely on these issues.

Poor developing countries are characterized by weak financial systems which are often inaccessible to most of the population.

The rule of law is weak and government is often highly corrupt.

A wide variety of different forms of government is found in third world countries.

• War and the breakdown of the state

Some of the poorest developing countries have suffered form war over the past 30 years which sometimes has led to the breakdown of the state.

Developed countries have experienced a long period of peace since the middle of the last century.

Where there is civil war, economic development has gone backward.

Foreign trade, capital flows and debt

Developing countries vary enormously in their

trading relationships with other countries.

Some have been heavily reliant on exports of commodities such as oil or coffee.

Other are resource poor.

Sometimes exports are not high enough and there is a foreign currency gap.

Development has been slowed down as the country is unable to import enough to stimulate economic growth.

Some countries have developed manufacturing and service industries.

Flows of financial capital also vary between developing countries.

Some countries such as China, have seen large flows of financial inflows which have been invested directly into industry.

However, some countries find it difficult to attract foreign direct investment.

Some countries have borrowed heavily and then unable to repay the interest and capital, which led to debt crisis.

Development might be limited because of capital flight.

This is when citizens and businesses of a country believe that the economy will deteriorate in the future and so send their money abroad by buying foreign currency and other assets.

This reduces financial resources available within the country.

• History, religion and ethnicity

Third world countries differ considerably in history, religion and ethnicity.

Some argue that history is important as many third world countries are former colonies of current developed countries.

Religion can be important to development because of differences in attitudes to work and personal freedom.

Ethnicity can also be defining characteristics for countries.

Ethnic diversity could be argued to fuel economic growth.

Migrants are attracted from all over the world to the USA which creates a dynamic culture.

Countries like Sri Lanka, ethnic diversity has hindered development through civil war.