(FORTUNE Magazine) – Rare is the political idea that enjoys as much sustained bipartisan acclaim as the "enterprise zone"--especially in a partisan election season like this one. Republicans love the idea of creating low-tax havens to lure business to ailing neighborhoods. Their vice presidential nominee, Jack Kemp, is in fact Mr. Enterprise Zone, having introduced the first zone legislation in Congress 16 years ago. But Beltway Democrats, after some initial doubts, have become zone believers too: A variant called the "empowerment zone," created by the then-Democratic Congress in 1993, is a keystone of Clinton Administration urban policy. State politicians have sworn by the things for years: More than 40 states have enacted enterprise-zone laws since 1982. And to the world's hordes of public-policy intellectuals, the enterprise zone is that most wondrous of miracles: an idea that began as a wonkish twinkling in a professor's eye--and actually became reality.

But reality can be messy, and enterprise zones have strayed far from their intellectual roots to incorporate a muddle of legislative horse trades, 1960s-style urban activism, and old-fashioned civic boosterism. This adaptability has given the zones remarkable political staying power but almost certainly diluted their impact. It has also made it impossible to say what exactly they are and whether they really work.

The original idea, imported from Britain in the late 1970s, was to throw open troubled sections of a few big cities as experimental "freeports," where bureaucracy, regulation, social services, and taxes would be minimal (Hong Kong was a model). This resonated in the U.S., where repeated federal attempts to aid ailing cities in the 1960s and 1970s had generally left them worse off. If bureaucracies, social programs, regulations, and taxes had driven business and wealth out of older cities while holding problems in--as many urban experts had come to believe-- then it made sense to try to reverse the trend.

It soon became clear, however, that exempting inner cities from safety regulations, minimum-wage laws, and the like was politically impossible. The enterprise-zone legislation that then-Congressman Kemp began pushing in 1980 soon consisted almost exclusively of tax incentives. Same with the state enterprise-zone laws enacted while Congress dithered.

Many states also quickly dropped the idea of a closely watched experiment in a handful of cities, instead extending enterprise-zone benefits to any area--urban, rural, or even suburban--that was suffering even moderately hard times. It didn't make much economic sense, but it was excellent politics, which is why Louisiana at last count had 1,669 enterprise zones, and more than 70% of Colorado, including the swanky ski resorts of Steamboat Springs and downtown Telluride, is within the boundaries of an enterprise zone. And the state enterprise zones of today are very different from what libertarian, small- government types like Kemp had in mind--in part because it's hard to find libertarian, small-government types to run government programs. Many feature activist administrators, job-training classes, and government loans along with their tax breaks. The empowerment zones established by Congress in 1993 go even further, offering $100 million grants for social programs and development efforts.

Most of what economists know about U.S. enterprise zones is based on studies conducted in two states, New Jersey and Indiana, where zone laws have been on the books since 1983. The findings are maddeningly inconclusive (like much else in economics). State-funded surveys of enterprise-zone employers in both Indiana and New Jersey found such sharp job gains that the zones appeared to be more than paying for themselves. But a comparison of Indiana's zones with similar, nonzone areas of the state found only slight relative employment gains and no increases in per capita income. A just-completed study comparing New Jersey enterprise-zone cities with cities that qualified for zones but didn't get them found no impact on either employment or property values. "No matter how we sliced it, it didn't matter," says William T. Bogart, an economist at Case Western Reserve University.

None of the research shows enterprise zones doing any harm-- more than can be said of past government attempts to aid cities. Some economists argue that any help for dying cities is pointless, and government money would be best spent helping poor people move to where the jobs are. But such an approach has its pitfalls: City politicians don't want their constituencies to move away, and suburbanites don't generally want to play host to refugees from the inner city. A federal government attempt to move just 285 families out of Baltimore housing projects in 1994 fizzled in the face of ferocious public opposition.

Enterprise zones bring no such awkward confrontations. They don't appear to make anyone angry. That, in the contentious world of urban politics, is no trifling accomplishment. So expect to see a lot more of them.

--Justin Fox