Addressing the Pliva Business Forum in Zagreb on Friday, Porter said that better competitiveness required the change of mentality as Croats were stuck in the idea that something must be gained and not produced.
Many prefer the status quo believing that it is safer and more certain.
Prosperity can be achieved only by efficient companies, that is the business sector, which the government should free of unnecessary tax burdens and facilitate investments in inventive products, easier job creation and export increase, the professor said in a packed Vatroslav Lisinski Hall.
He warned against corruption and living standards beyond people's means.
Porter commended Croatia for making considerable headway in a short time after the war, and said that the country should be made attractive for business and investment in all sectors.
Croatia's European Union membership bid is a good move but everything will be tougher unless Croatia becomes more competitive before joining the bloc, according to Porter.
Later in the day, he was received by Prime Minister Ivo Sanader.