(FORTUNE Magazine) – THE TYPICAL chief executive of a FORTUNE Industrial 500 or Service 500 company is convinced of a couple of things: There will not be a recession next year and inflation will not get out of hand in 1988. Yet he is no more certain about the stock market than most people, thinking it is nearly as likely to go up as to go down in the next 12 months. His views on executive succession may discourage female aspirants. Ability notwithstanding, the CEO would be willing to bet a cigar or two that, alas, no woman will be boss of his company by the year 2000. These are among the results of the first FORTUNE poll of more than 100 CEOs. The survey will be conducted several times a year on a variety of questions. The executives were also asked to suggest what the U.S. should be doing to improve its international competitiveness. Their replies, often passionate, were summed up by Merle H. Banta of AM International, the office machine and computer company. Says he: ''It's not a single policy. It is a whole array of things. It is trade policy, the deficit, the tort system and environmental laws, corporate policies, and the educational system. If we don't remain competitive, our children will suffer -- they will have a lower standard of living than we did.'' The respondents were selected from among the largest companies in each industry in the FORTUNE 500 and the Service 500. The methodology used makes the results reliable and projectable, meaning they are as valid as if all 1,000 CEOs had been interviewed. The telephone poll was conducted for FORTUNE by Clark Martire & Bartolomeo Inc., an independent opinion research firm, from August 10 to 14. Of the major economic issues facing executives, no two are more important than recession and inflation, which can mangle budget and production forecasts. Fully 84% of the CEOs polled did not see a recession -- that is, two consecutive quarters of decline in real GNP -- by the end of 1988. In all, 81% agreed that inflation would not top 6% next year. Those opinions concur with FORTUNE's forecast, which bars the recessionary wolf from the door at least through 1988 and sees inflation averaging 5.5%. The CEOs' faith in the economy did not necessarily extend to stocks. In all, 50% said the market would be lower a year from now; 42% believed it would be higher. The Dow Jones industrial average hit 2690 the week of the interviews. (For an analysis of the new forces behind stock values, see the cover story.) What is the major impediment to U.S. competitiveness abroad? The CEOs' favorite villain is Washington. When asked in an open-ended question to suggest ways to improve competitiveness, 28% responded that the federal government should interfere less with business. ''We need less U.S. government intrusion and regulations on the business of American firms,'' says Leslie McCraw of Fluor Daniel, an engineering and construction company. George M. Keller of Chevron echoes the sentiment: ''We have to get unregulated. We are commercial industries, not instruments of foreign policy, and we are not political animals.'' John McConnell of steelmaker Worthington Industries insists, ''The government should either reduce Environmental Protection Agency requirements or help finance them.''

Despite their complaints, the executives see several legitimate roles for government, particularly in promoting free trade. That was cited by 19% of the respondents as something the government should do to improve competitiveness. When trade is not free, they want the odds evened, as Rubbermaid's Stanley C. Gault explains: ''We need to get a trade bill at the federal level that addresses the improper and unfair trading practices between the U.S. and its major trading partners. We don't have a fair and free opportunity. Our market is open to any producer, yet in many cases their markets are virtually closed & to American products.'' Even so, without prompting, a third of the CEOs declared themselves free marketers opposed to outright protectionism. As John Hayes of National Gypsum Co. says, the government should ''break down protectionist barriers and not permit any new protectionist barriers.'' Decreasing the deficit and balancing the budget are also among the executives' favorite prescriptions, with about 19% mentioning them. Many CEOs see debt reduction as the first step of a two-part program, the second being either market intervention by the Federal Reserve to weaken the dollar still further in order to enhance exports, or more incentives to encourage capital formation and growth. ''Restore the tax incentives that were taken away by tax reform, such as the investment tax credit,'' implores Milton H. Ward of Freeport-McMoRan, a mining company. ''We need to build incentives for the development of new companies.'' While many of these business leaders agree that deregulation and deficit reductions are the government's best weapons to help business, Kenneth L. Lay of Enron Corp., a natural gas company, would change the whole tax system. ''We should be shifting to the value-added tax, comparable to the European market's, as opposed to a corporate income tax,'' he says. The CEOs had less to say about what business should do on its own to improve its competitiveness. Most important, many assert, is increasing productivity, mentioned by 16% of the group, and cutting costs, cited by 11%. Hicks B. Waldron of Avon argues that ''raider activity is hurting our productivity and competitiveness.'' Nearsightedness is another problem, says James Kinnear of Texaco: ''The pressures associated with short-term earnings results tend to reduce the amount of money spent on R&D, which is an inherently long-term process.'' William J. Popejoy of Financial Corp. of America sums up, ''We must compete through research and development to make cheaper and better products. The key is to provide the cheapest product with the best quality. If we fail to do this, we will fall further behind.'' By any measure, it's a healthy sign when increased productivity comes through as the executives' principal goal. And, as indicated in FORTUNE Forecast, there is already surprising and heartening progress in manufacturing productivity.

CHART: Q RECESSION A

Do you expect a NO 84% recession -- that is, YES 13% two or more con- NOT SURE 3% secutive quarters of decline in real GNP -- by the end of next year?

Q THE MARKET A

Do you expect the LOWER 50% stock market to be HIGHER 42% higher or lower ABOUT THE SAME 4% a year from now NOT SURE 4% than it is now?

Q INFLATION A

Do you expect LESS THAN 6% 81% inflation, as MORE THAN 6% 12% measured by the ABOUT 6% 7% consumer price index, to be more or less than 6% next year?

Q WOMEN A

What are the POOR 40% chances of a FAIR 40% woman becoming GOOD 20% CEO of your company by the year 2000?

Q COMPETITIVENESS A (MOST FREQUENT RESPONSES)

What should the U.S. REDUCE GOVERNMENT INTERFERENCE 28% be doing to improve its PROMOTE OR MAINTAIN FREE TRADE 19% international BALANCE THE BUDGET OR DECREASE THE DEFICIT 19% competitiveness? INCREASE PRODUCTIVITY 16%

CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: See above.