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On what basis did we divide the world into The First world, second world and the Third world?

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United Nations liberalized the definition in the Paris Treaty

1st World - Nations that will give money to other nations

2nd World - Nations that will neither give nor receive money

3rd World - Nations that will receive money

4th World - Nations that will receive money disproportionally to their economic stature (catch-up)

5th World - Nations who have no economic stature