I don't think a lack of competitiveness is to blame for the lack of quality footballers produced in England to those in Brazil (if anything it could be part of the problem). Part of the reason though must be that Brazil have an historical legacy of playing the "samba style" that has become part of Brazilian football culture, and consequently kids there learn to focus on developing the skills they need to emulate their role models - Pele, Garrincha, Socrates, Romario etc....
What are the reasons Brazil developed the players in the first place to build that legacy is probably explained by social factors that in a previous thread sabre alluded to, what you could call the underlying the difference. Being a football crazy nation but at the same time (perhaps) not having the infrastructure or organisation of a "developed" nation must mean more kids play the game in a more informal, relaxed setting (perhaps the weather is a factor) where the ball mightn't even regulation standard - if it's a ball at all - and where the pitches undulate; under these conditions agility and control become more important in extracting enjoyment from the game itself (having a kickabout with an irregular ball must require more skill to keep the game fluid, and so to make it enjoyable); and then when it comes to moving on to playing in a more formal setting their skillset is already largely developed, and so for what they may lack in organisational awareness, they make up for in the skills they've already acquired - the basics that after a certain age become essentially "unlearnable" (though improvable) qualities (whereas organisational skills can be learned as they depend more on simple concentration and hard-work). When you compare such a setting to an English or European one; playing in a formal - you could even say rigid - setting, in organised groups with the best balls and grass pitches, where - because they play in groups, against groups - (an identifier) - winning trumps just about everything. "We're better than you" (their mums and dad's even sing songs about it ffs).