The Global Market and Developing Nations

A Three Part World?

In the past, people classified nations into three different “worlds”: The “first world” of nations aligned with the United States and capitalism, the “second world” of nations aligned with the now-defunct Soviet Union and communism, and the “third world” of nonaligned (and generally poor) nations. People use the term “third world” to refer to poor nations in general, but many people are not certain of its origin. (Some think that it means that one-third of the world is poor.) In any event, the classifications of nations according to their wealth and poverty and stage of economic development has become more sophisticated over the past two decades.

This is just as well and not just because more precise language is generally better. With the end of the Soviet Union in 1989, the “three world” scheme became obsolete. The United States, standard-bearer of capitalism, and the Soviet Union, the star of socialism, served as polar opposites and organizing principles for the world economy. However, the Soviet economy collapsed due to its inefficiency and its attempts to compete with the U.S. defense industry.

Without the countervailing force of the Soviet Union and the alternative economic system of socialism—as ineffectual as that force ultimately proved to be—the United States stands out as an economic superpower even more, for better and worse. On the one hand, it stands as a shining example of the standard of living industrious people can achieve in a free market economy. On the other hand, it stands as a symbol of acquisitiveness, consumption, and even economic and cultural imperialism. It is easy and comfortable for many Americans to ignore or dismiss the negative characterization, but that doesn't make in any less real for people around the world who agree with it.

Let's take a look at that world, with the goal of understanding it.

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Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

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