Employers should be given a greater role in designing vocational courses in an effort to increase their popularity with young people, according to inspectors.
Vocational education is held in greater esteem abroad because it provides a clear route into higher education or work, said the Office for Standards in Education.
Vocational teachers normally have industry experience, which is regularly updated by placements, and companies are directly involved in course design.
"This helps to ensure that teaching is firmly embedded in current commercial and industrial practice and that strong links are forged with employers," a new Ofsted report says.
Inspectors visited Denmark, the Netherlands and New South Wales, Australia, to examine the lessons that could be learnt for vocational education in England.
The proportion of young people staying on in full-time education beyond the end of compulsory education is higher in all three countries visited than in England.
Ministers see vocational education as vital to improving post-16 staying-on rates, but have so far had little success in persuading young people that academic and vocational studies deserve parity of esteem.
David Bell, the chief inspector, said: "We need to raise staying-on rates and do more to exploit the role of employers in developing and assessing qualifications.
"More must be done to ensure young people understand how valuable vocational courses can be and to encourage more of them to stay on into full-time education or training."
Pathways to Parity is available at www.ofsted.gov.uk