The new Under-21s manager believes the influx of players from all over the world has blocked the path for youngsters looking to break through the ranks at their respective clubs and as a result, the pool of talent from which senior boss Roy Hodgson has to pick has been reduced.
Southgate's comments came after Everton teenager Ross Barkley and Tottenham's Andros Townsend, 22, were included in Hodgson's squad for the forthcoming World Cup qualifiers against Moldova and Ukraine.
Southgate told talkSPORT: "The big problem historically for any young player getting into a first team is managers who are under pressure in their jobs deciding whether they take a chance on a young player or not.
"That was the same when I started at Crystal Palace and it's still the same now.
"The difference is the players blocking their path are now from all around the world. In the old days, all those players were English or British.
"The pool of players Roy Hodgson has to pick from is far smaller than before, but I think the pool of players I have to pick from at Under-21 level who are getting into first teams isn't a lot different.
"You won't get many kids of that age playing top-flight football week in, week out. It's just very unlikely.
"The issue I think we have is that, with the seniors, there is a smaller pool of players playing regularly and then we're having to push through younger players that are playing maybe earlier than we would ideally like to."
Meanwhile, the Football Association has confirmed that Chelsea coach Steve Holland will assist Southgate for qualifiers against Moldova and Finland as he prepares to take charge of his first matches over the next week or so.
Holland, assistant first-team coach at Stamford Bridge, began his coaching career under Dario Gradi at Crewe, where he spent 17 years, and joined Chelsea in 2009 after a spell at Stoke.
Southgate said: "I'm delighted that we will have the input and experience of someone of Steve's calibre joining us for these two games.
"He brings a great knowledge of coaching, working with some of the very best young players over a long period of time.
"I was keen to bring in someone who has a wealth of experience in youth development, as Steve does, with both Crewe and Chelsea.
"But it's also significant he has worked with players at the highest level in an elite field.
"Indeed in recent years, he has worked with a group of players who have won FA Cups, Premier League titles and the UEFA Champions League.
"I must also thank Jose Mourinho for his support in Steve coming into the set-up. To have not only the consent, but also encouragement and backing of Chelsea is very important to us."
Holland revealed his excitement at the prospect of helping to develop a new generation of England players.
He said: "The international break at Chelsea is always a very quiet period as we have so many players away representing their countries and often only three or four players remain at Cobham, so Jose Mourinho was very happy for me to be involved and very supportive.
"I met Gareth Southgate this week and we spoke about plans for the England Under-21 team and the FA are looking forward with Roy Hodgson and the England senior side.
"We spoke about the type of player they are looking to select going forwards, the playing style that the FA are looking to apply across all the national teams now and I was very impressed.
"I think it is an exciting time to be involved as I believe there is a strong will within the FA to try to improve the development of our young players, and I am very excited to be asked to be involved."