Abstract: This study examines the relationships between foreign
aid, levels of schooling and democracy for Pakistan using the ARDL
cointegration approach. The results of study provide strong evidence
for fairly robust long run as well as short run relationships among
these variables for the period 1973-2008. The results state that
foreign aid and primary school enrollments have negative impact on
democracy index and high school enrollments have positive impact
on democracy index in Pakistan. The study suggests for promotion of
education levels and relies on local resources instead of foreign aid
for a good quality of political institutions in Pakistan.