The term Third World is a peculiar linguistic artifact from the Cold War. Usage in the English language accelerated in the mid-1960s, peaked in the mid-1980s, and has steadily declined ever since.
It originally described all the nations not aligned with either the United States or Soviet Russia during the Cold War. B.R. Tomlinson explains,
Like so much of the terminology used by historians and social scientists in the second half of the twentieth century, the notion of a Third World grew out of the rhetoric of the Cold War in the late 1940s and 1950s. The phrase had its origins in the idea of a ‘third force’ or ‘third way’ in world affairs (distinct from American capitalism or Soviet socialism) that was identified in the polemical literature of the non-communist European left in the late 1940s. The term was coined in August 1952 by the demographer and economic historian, Alfred Sauvy, in an article in the French socialist newspaper L’Observateur, entitled ‘Trois Mondes, Une Planète’, which stressed the disempowerment of the newly-independent countries of Asia and Africa, concluding that ‘the Third World has, like the Third Estate, been ignored and despised and it too wants to be something’.
This grossly oversimplified trichotomy seems to have framed dependency theory and later, world-systems theory. The research paradigm was fertile soil for grand historical narratives with extremely weak predictive value.