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Cooperatives play important role in economic development via multiple channels, particularly, in developing countries' cases. Considering this fact, Nepal's constitution 2017 has incorporated the cooperative as one of the three pillars of her economy. This paper aims to analyze the role of cooperatives in the economic development of Nepal. For this, first, this paper documents the trend and pattern of Nepalese cooperatives' evolving structure, then moves to the econometric estimation to analyze the role of cooperatives in economic growth employing an advanced methodology. Looking at the properties of time series data for the period of 49 years from 1970 to 2018, the autoregressive distributed lag (ARDL) approach of cointegration is employed. The major finding is that the development of the cooperatives has a long‐run relationship with economic growth. However, the focus should be seen as on the involvement of many people in the cooperatives' activities rather than just on amassing the cooperatives' capital. The results also suggest that there is a need for the attention of policymakers so ensure that share capital contributes to economic growth. Therefore, the areas of priorities and scope of work of cooperatives need to be reconsidered when formulating new policies related to cooperatives. [ABSTRACT FROM AUTHOR]

Summary: Motivation: While economic growth is usually necessary to reduce poverty, it is often not sufficient. Industrialization, especially manufacturing, tends to create jobs that are more productive than in other sectors, and which pay more, thereby reducing poverty. Structure of production therefore matters as well as growth of production. Purpose: How much does industrialization mediate the relation of economic growth to poverty reduction? Methods and approach: We deploy Causal Mediation Analysis, with industrialization as the mediator. The mechanism decomposes the impact of economic growth into direct effects on poverty, and those that apply indirectly through the mediator of industry. Data comes from the Groningen Growth and Development Centre and UNU‐WIDER Economic Transformation Database (ETD) which covers 51 countries in the global South from 1990 to 2018. Findings: Economic growth directly reduces poverty, but the full impact arises from the mediating role of industrialization. Almost 50% of the impact on poverty occurs through employment in manufacturing. Policy implications: Social policies to reduce poverty will be incomplete if the production structure of economy is disregarded. Economic policy must consider the importance of industrial economic activities to amplify the impact of economic progress. On the contrary, policies promoting economic growth without creating industrial jobs will fail to offer accurate solutions to the poverty problem. [ABSTRACT FROM AUTHOR]