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The political history of Pakistan is strongly associated with the international political economy circumstances. Constrained due to the geographical location and her position in the regional political circumstances immediately after the independence, Pakistan opted for an alliance with the United States. The nature of Pakistan’s linkages with United States proved to be extremely counterproductive for the process of democratisation and prospects of institution-building. Various US administrations exploited the US-Pakistan’s asymmetrical relationships by taking advantage of Pakistani army’s alliance in pursuit of their imperialist policies in the Middle East, Cold War with USSR in Afghanistan and recently the War on Terror. Since, the authoritarian regimes continued to rule Pakistan under the auspices of US administrations, Pakistan remained stranded between the status of a complete autocracy and competitive authoritarianism since its independence till date. Pakistan has been one of the major recipients of foreign aid from US and other multilateral aid and development agencies but this aid has primarily been used to consolidate Pakistani army. The continuous inflow of development aid has had a negative rather than positive impact on Pakistan’s economy and political institutions.