This dissertation explores the underlying concepts of enterprise zones, assesses their effectiveness, and seeks to identify conditions under which enterprise zones work. It covers 70 zones in California, Delaware, Maryland, Pennsylvania and Virginia (roughly one-tenth of the nation's locally administered zones established before 1987). It first reviews previous studies and exposes common methodological problems and theoretical weaknesses they confront. Pulling literature from industrial location, local economic development, and taxation studies, it develops and applies an analytical framework for classifying and evaluating zone performance. It measures zone performance in terms of the difference in the percent changes in employment and business establishment between zones and their regions. Next, it conducts a survey to investigate how zones are structured and managed. Combining survey results and zone performance data, it uses regression models to identify determinants of zone success. Finally, it includes case studies of three zones, all with an above-average performance to further validate previous statistical findings and to provide insights on the operation of 'successful' zones. This research finds that there is considerable variability among zones, but most of them do not adhere to the original laissez-faire conception of enterprise zones. In general, changes in employment and business establishment within a zone differ little from those of its region. However, active management and outreach by zone administrators tends to improve zone performance. Successful zones are typically those which are small, actively managed, with a simple program structure, located in a growing region, and with some basic location advantages. This dissertation research cannot link any specific economic development tool adopted in enterprise zones to their performance. Instead, regression models and case studies find that zone performance is determined by regional growth, initial zone conditions, and the employment size of the zone. Finally, income and employment levels in enterprise zone communities are found barely changing even when zones are experiencing rapid employment growth.