(FORTUNE Magazine) – Too bad the presidential election didn't feature a serious debate about how to improve economic growth in America. No single question vexes economists more, and none is as potentially important for the nation. The subdued growth rate of the past two decades--especially in the 1990s--is the fundamental reason for the economic insecurity that overhangs any discussion of jobs and living standards and the future. Anything we could do as citizens, business people, and voters to make the economy grow faster would yield enormous dividends for us and for future generations.

Instead of that debate we got Bob Dole's ambitious, unconvincing tax plan--barely enunciated, largely because the candidate himself didn't seem to believe in it--and his last-minute forecast of impending recession. We also got President Clinton's blizzard of microproposals (tax credits for children, expanded IRAs)--driven more by politics and public opinion polls than by a coherent strategy for improving the nation's economic atmosphere. What little debate there was had a cynical, sham feel about it, and even that was crowded out by the myths that have grown up around the subject of growth.

The biggest single myth is that the economy could easily expand far faster if we made a few simple policy changes. This myth achieved a kind of Olympian apogee in the vice presidential debate, when Jack Kemp blithely asserted that we should double our recent 2.5% average growth rate to 5%. Economists and others who share Kemp's supply-side politics swear loudly that GDP could effortlessly grow at 4%-plus. Listening to that kind of talk is like listening to small children talk about sex: It's alternately charming and unsettling--but you know they're talking about something they don't understand.

There are only three basic sources of overall economic growth: growth of the labor force, growth in capital stock, and growth in productivity--how efficiently those people and machines are utilized. You can toss in a wild card: innovation--the appearance of new kinds of goods and services. And you can add another if you bring the debate down to the national level: growth in exports. That's it. And that's why any debate about raising the growth rate needs to be grounded in the reality of 2.5% instead of floating in the Kempian ether.

There have indeed been single years in the modern era when the economy grew faster than 5%, and even a few multiyear episodes. But look closer and you quickly see why they can't serve as a model for today. One of the best runs the U.S. economy had was in the middle 1960s: GDP grew 5.8% on average from 1962 through 1966. But the other thing that's notable about those years is that the labor force was growing 3.5% per year on average--more than twice the 1.5% rate of the 1990s. What about the middle 1980s--beloved by the Reaganites, when growth again averaged near 5% for three years? Those were years of recovery from one of our worst postwar recessions (1982). The average GDP growth rate for the 1980s as a whole was 2.7%--only a hair better than the recent average.

Given that the labor force is growing so slowly today, that we're in the fifth year of recession-free expansion, and that--with unemployment low and business output high--the economy seems to be operating close to its current capacity, it's no mystery why nearly all mainstream economists agree that a huge sustained shift in the GDP growth rate is unlikely and that any substantial improvements will be hard-won.

Another myth about growth is that it is some kind of abstract process that exists in the world of economics--that growth is an environment that businesses operate within, instead of something they play an important part in creating. In fact, of the three sources of overall economic growth we've enumerated, the third--increasing the efficiency of labor and capital--is a large part of what business is about. Many companies can and do grow much faster than the economy. Just how--and how not--to do this is a subject with its own mythology, which the next story will illuminate.

One reason business people are attracted to fast-growth economic arguments is that we all know that our own companies and our clients, suppliers, and customers could do better and grow faster. The nature of that growth is important, however. Revenue gains of a company don't necessarily translate into economic growth, at least not dollar for dollar. To the extent you grow by taking market share away from competitors, you are reslicing the economic pie--not expanding it.

But take market share away from foreign competitors, and you are expanding the domestic economy. In fact, had it not been for the powerful export performance of American business in recent years, GDP would be growing far more slowly than it has been. In the 1990s, U.S. exports have grown at a real rate of better than 6.6% per year--and last year, at 9% as the overall economy eked out a 2% increase. Had exports grown only as fast as the GDP, overall 1995 growth would have been 0.7 percentage point lower--a scant 1.3%.

Another way businesses foster economic growth is by creating new needs and desires for consumers. Think about the spectacular display of economy-expanding innovation we're witnessing as the Internet comes of age. This year, according to Zona Research, which tracks tech trends, spending on Internet-related products like Web browsers and servers will exceed $12 billion. To that you might add the unquantifiable but surely vast sums individuals and businesses are paying for new PCs to enable them to use the Net better. Right there's another couple of tenths of a percent of this year's GDP growth.

Last, businesses can help the GDP expand faster simply by becoming more efficient. Again the logic is straightforward. Sure, when a company fires workers because it figures it no longer needs them to maintain a certain production level, some of the departees become permanently unemployed--and thus subtract from economic growth. But most will go on to other jobs, to produce other goods and services. The net result: more growth.

Can Washington do anything to raise the nation's growth rate? It could. We've known for years that reforming the tax system and entitlement programs would improve the economic outlook mightily. Trouble is, our political leaders aren't going to do any of these things--at least not in the near future. But the final myth about growth is that Washington can do nothing else. As you'll read in the last story in this package, a number of modest, practical steps lie within its grasp that could make a powerful difference for America's economic future.

REPORTER ASSOCIATE Lixandra Urresta