Cannavaro predicts future woes for Italy
"I think there are not many changes we can make. At the moment, Italy is not producing players like in my generation when we had great players," he told a news conference on Friday.
"It's not just the national team, it's the clubs. We have good players but not top drawer. I've been saying for a while that the system has to change. We have to invest in youth."
The Azzurri slumped out of the World Cup at the group stage, failing to win a match at the finals for the first time after drawing with unheralded Paraguay and New Zealand before a dire 3-2 defeat by tournament debutants Slovakia on Thursday.
Cannavaro, who has now retired from the national team, also dismissed suggestions that tricky Sampdoria playmaker Antonio Cassano or Inter Milan's teenage striker Mario Balotelli could have made a difference if they had been in the squad.
"There are no phenomenons," he said eyebrows raised.
"If they were, we would have brought them. I like Antonio but he played in two European Championships and we didn't win. Mario is a good young player but he has to demonstrate it more."
The 36-year-old Cannavaro now heads for semi-retirement at Dubai's Al-Ahli having flopped personally in South Africa just four years after being world player of the year.
"Sure it would have been easier to quit in 2006 but it didn't seem right," he said. "If this shirt is heavy to wear it's because of what we did in 2006. Sure this is a dark moment but it can't cancel the great things we did in 2006."
Italian federation president Giancarlo Abete said he would not be resigning because his decision to rehire 2006 World Cup winner Marcello Lippi as coach in 2008 was an obvious choice.
Lippi had already announced he would be leaving after this World Cup and Cesare Prandelli will take over as Italy coach on July 1, although Abete said the former Fiorentina boss had still not formally signed his four-year contract.
Prandelli has a major challenge on his hands to revive Italy's fortunes, which Abete openly acknowledged.
"Lots of Italian players are not at an international level," he said, bemoaning the fact only 42 percent of Serie A players are Italian but European Union law makes changes unlikely.
Abete, who said Thursday's first half was "unwatchable" because Italy failed to string two passes together, led the federation calmly out of Serie A's 2006 match-fixing scandal but failed in bids to host Euro 2012 and 2016.