Israel became a theocracy and a model for future Christian nations to base their societies on God's laws, as well.
Some people argue that the NT does not describe a Christian Theocracy, and instead focuses only on individual salvation. But that isn't quite true. We do come to Christ as individuals, but we are called into society, the Church.
And Abraham's nation, Israel, did become a model for the nations that God also promised to Abraham. Paul argued that this was fulfilled in the Church.
However, in the time of the writing of the NT, the Church had only begun as a minority within Israel, and had only started an outreach to the nations. Christianity was just a minority religion until Rome adopted Christianity under Theodosius.
So Christian nations did eventually evolve after the pattern of Israel's theocracy, and we have called them "Christian nations" typically. Today, the term "theocracy" is avoided out of concern to disassociate with the Islamic theocracy and other religious theocracies. But Christian nations, no matter the form of government, is a theocracy when the country is a self-proclaimed Christian country, or Christian state.
The failure of Israel as a theocracy did not mean the failure of their model for all nations. On the contrary, they showed that a theocracy only works when its principles are being responsibly followed.
The theocracy of Israel succeeded even before Christ because it was not based on perfection, but on the idea of redemption. Now that redemption is complete in Christ, it is affirmed that theocracy is God's model for the nations.
We are to responsibly follow Christian principles as a Christian society, without necessitating perfection. Christ has forgiven our sins, and this forgiveness applies when we regularly practice repentance.
Those who want to return to pagan forms of government are Antichristian, and Christians should not give up their belief in the Christian government, even if they are outnumbered. It is our testimony that is critical, and not the success of our society.