What is the relationship between democracy and good governance? How does this relationship play out in Pakistan. Specifically, how can the performance of the current government evaluated from March 2008 to March 2009 based on the criteria of god governance and democracy. This background paper attempts to answer these and other questions on the issues outlined above in the specific context of the completion of the first year of the PPPP Government and its 1st year performance. The background paper is authored by S. Akbar Zaidi, one of Pakistan’s best known and most prolific political economists. Mr. Zaidi has used his insight and knowledge on the complex subject of relationship between good governance and democracy and has used that relationship to assess the performance of the government.