Anxieties about development in New Zealand show up in a deep-rooted fear of the ‘Third World’ in the country. We examine how the term ‘Third World’ is deployed in media discourses in economic, social and environmental contexts and how this deployment results in a ‘discursive distancing’ from anything associated with the ‘Third World’. Such distancing demonstrates a fragile national identity that struggles with the contradictions between the nation's desire to be part of the ‘First World’ of global capitalism and the growing disparities in health and wealth within it. The shadow of the ‘Third World’ prevents New Zealand from confronting the realities of its own inequities, which in turn comes in the way of a sound development agenda.