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Underdeveloped or Less Developed or Third World Countries:

It was the Industrial Revolution which bifurcated the World into two distinctive parts. The Rich Countries and the Poor Countries. The rich countries are consisted of US, UK, France, Germany and Australia etc. Where the incomes, outputs, and employment levels rose sharply. Whereas the poor countries are consisted of Pakistan, India, Bangladesh and so many from Latin America and Africa. They have poor levels of income, employment and production. They have very poor standard of living. The literacy rates in the poor counties are very low. The basic needs like food, health and shelter are provided to the masses in very lower amounts. Accordingly, one comes across the heavy flow of diseases, miseries and troubles in case of poor countries commonly known as “Developing Countries, Underdeveloped Countries, Less-developed Countries and Third World Countries”.

All the poor countries are not alike. Therefore, the economists and policy makers classify the developing countries. Despite certain dissimilarities, the Third World countries have a lot of common characteristics.

Definition and Explanation of Developing World:

In connection with defining the developing countries, a very common method is that of “Per Capita Income”. So many international agencies like Organization of Economic Co-operation and Development ( OECD) and United Nations (UN) classify the countries on the basis of their economic position. But it is the World Bank (WB) which adopts its Atlas method to define the development level of a country.

The World Development Report (2002) where the WB included all of its members and all those countries whose population was more than 30,000, the classification of the economies was made on the basis of per capita gross national income (GNI) for the year 2000.

It classified the economies amongst Low Income Countries (LIC), Lower-Middle Income Countries (LMC), Upper-Middle Income Countries (UMC), and High-Middle Income Countries (HMC), which are the countries with OECD and certain other countries.

The LICs are those countries whose per capita GNI in 2000 was $755 or its below.

The LMCs and those countries whose per capita GNI was in between $756 to $2995.

The UMCs are those countries whoso per capita GNI was $2996 to $9265.

The HMCs are those countries whose per capita GNI in 2004 was $9266 and above.

Sometimes a distinction is made between high income and middle income countries. As some of them have made remarkable progress in the field of manufacturing and they are given the name of Newly Industrialized Countries (NICs). Again, a classification is made regarding developing countries on the basis of International debts. According to WB, the classification of developing countries can be made on the basis of Severely Indebted, Moderately Indebted and Less Indebted countries. Whereas the United Nations Development Program (UNDP) ranks the countries on the basis of Human Development Index which is constructed on the basis of education and health standards.