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By definition, a theocracy is a government headed by God, so the selection of theocratic leaders would be at the choosing of God.
Yes, when religious leaders run a government it is a theocracy. Many countries today are still theocratic.
how is leaders chossen in Liberia
The word "theocratic" comes from the Greek words for "god" and "government. It means "government by priests" or whatever kind of religious leaders the particular state has. A "theocratic republic" would be a state whose governors are elected from a group of priests. Vatican City is a "theocratic republic". The government of Iran, although described as a republic, is really more like a theocratic constitutional monarchy, as the Supreme Leader (Ayatollah) is not an elected position (but is one which is always filled by a top cleric.)
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Iran
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Theocracy
Leaders are chosen because of the citizens electing them.
Iran is at least one country with a theocratic government.
The current government of China is what we would describe as a self-perpetuating oligarchy. New leaders are chosen by existing leaders. The Chinese government is basically a small, select club, which chooses its own new members.