The Three Lions manager came under fire after seeing his side crash out of the World Cup at the group stage earlier this summer.
However, Hodgson believes that the current crop are good enough to succeed, but would improve with more regular game time at club level.
"We are going to have to accept that some young players - who I think are good enough and can win games for England - will not always be first choice for their teams in England," the 67-year-old told the FA's official website.
"It wouldn't hurt them at all to go abroad. Most of our players - although they don't all play regularly - play at very good clubs at a very high level.
"If you're asking me would it be better for some of our players to be playing in good teams abroad rather than warming the bench, then of course, as a national team manager I would like to see that."
England return to action next month when they host Norway at Wembley.