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Theocracy is a state where the country and its people are ruled by a group of people who are believed to be guided by the almighty. Thus it implies that in a theoretical state the ruling body is chosen on religious basis. Democracy is however a completely different scenario. In a democratic state the governing body is chosen by a system of elections.  

However it is not so difficult to conclude that with the examples of theocratic countries such as Iran, theocracy as compared to democracy is not a very progressive form of government. It tends to curtail basic human rights and can be misleading in the name of religion. It has its advantages as well but they are few and there is no real positive effect.