When they were invented, they did what they were supposed to - in 1943, nobody had ever done this. In 1943, the mean annual income on the island was $142. The economic boom that followed on the tax incentive plan made Puerto Rico's mean income the highest in Latin America, built was was, in 1972, one of the finest electric grids in the world, and led among other things to an automobile-per-capita rate that's even higher than the rest of the United States.
Unfortunately, the heirs of the architects of those policies had no idea why they worked. So as world economic conditions changed, they just doubled down on the cargo cult, and stagnation followed. Then Congress decided it wasn't fair to prop up large businesses who were taking advantage of cheap labor, and yanked the rug out from under the whole scheme in 2006.
