Southgate said: "You have got to try to make decisions for the long-term benefit of the club and the players.
"That is the route we have decided to go here. I understand I am in a fortunate position in terms of the chairman thinking that way but, also, I am prepared to take that chance.
"It's the way I believe is right and you should stick to your beliefs.
"We have done that because we have had talented players in the academy, but also because of necessity. Financially, we cannot always compete with some of the other Premier League clubs, so we either take a second tier of players transfer-wise, or you try to grow your own.
"We feel we have, in certain positions, players who are good enough to go into our first team.
"(Academy manager) Dave Parnaby has done a fantastic job here and we have had more players come through than we could have possibly dreamt of.
"But that flow will not always be there, there might be years when we do not get anybody through.
"You have to plan long-term and hope you can buy from elsewhere to fit in around the players you are bringing through."