The terms First World, Second World, and Third World were used to divide the nations of Earth into three broad categories. The three terms did not arise simultaneously. After World War II, people began to speak of the NATO and Warsaw Pact countries as two major blocs, often using such terms as the "free world" as compared to the "Soviet bloc". The two "worlds" were not numbered. It was eventually pointed out that there were a great many countries that fit into neither category, and in the 1950s this latter group came to be called the Third World. It then began to seem that there ought to be a "First World" and a "Second World".

Eventually, it became common practice to refer to nations within the Western European and United States' sphere of influence (e.g. the NATO countries) as the First World. Besides North America and Western Europe, the First World also included other industrialized capitalist countries such as Japan and some of the former British colonies, particularly Australia, New Zealand, and South Africa.

There were a number of countries which did not fit comfortably into this neat definition of partition, including Switzerland, Sweden, and the Republic of Ireland, which chose to be neutral. Finland was under the Soviet Union's sphere of influence but was not communist, nor was it a member of the Warsaw Pact. Austria was under the United States' sphere of influence, but in 1955, when the country again became a fully independent republic, it did so under the condition that it remained neutral. Turkey which joined NATO in 1952 was not predominantly in Western Europe and was not industrialized. Spain did not join NATO until 1982, towards the end of the Cold War and after the death of the authoritarian dictator Franco.

With the 1991 collapse of the Soviet Union, the term "Second World" largely fell out of use and the meaning of First World has extended to include all developed countries.

In recent years, as many "developing" countries have industrialized, the term Fourth World has been coined to refer to countries that have been left out of economic globalization and still lack industrial infrastructure.