The distinctions had nothing to do with the development of countries in the beginning. In fact, it was the cold war that gave rise to the definitions. Here's how it worked: NATO members and other countries supporting US were the 'first world', the eastern bloc under Soviet security umbrella and the Warsaw Pact countries supporting USSR were the 'second world' while all the other neutral were assigned the 'third world' which included Nepal, India and others. China was neutral yet considered second world due to its communist ideology. But slowly, the developed countries in Europe west to the Iron Curtain (the sphere of influence of US), Australia, New Zealand among others were also included in the First world countries and in the 90's the economic boom of Japan and South Korea and not to forget their stronger ties with US made them the first world or the developed countries. American mainstream media sometimes does refer to first world countries in lieu of developed countries.