Taylor saw his side crash out of the Under-20 World Cup following their 2-0 defeat to Egypt, attaining just two points from their group games in the process.
Taylor told reporters: "You only have to look at any other country and you'll see that they don't have the same number of foreign players in their top leagues as we do.
"But the number of foreign players playing in it is restricting the development of young English players. I would love to see a restriction on the number allowed, but I'm told we aren't allowed to do that.
"Hopefully we will be able to restrict the influx by producing more world-class youngsters ourselves who clubs won't be able to ignore."
The England Under-21 side also failed to make it out of the group stages of the European Championship this summer.