Manchester City's next generation will dominate Europe because City's financial resources allow them to both develop their own talent and, where appropriate, simply buy it from other clubs as needed.
The phrase "Manchester City's next generation" is thus misleading on its face.

Ordinarily, when you speak of a football club's "next generation," you mean its developmental program or perhaps youth signings they have made who are presently on loan to clubs not playing Premier League football.

Make no mistake, City have these options in hand.
City's developmental program is a declared priority to the club, and they are justifiably proud of the results the program has achieved. Per the club's website:
The Academy was set up in 1998 to provide a strong and effective Youth Programme, for the recruitment and development of young footballers within Manchester City Football Club.
Since then, 30 young players have emerged from the Academy to play first-team football for Manchester City, an unprecedented achievement in the modern era.
And as my Bleacher Report colleague Rob Pollard set forth in splendid detail, City have spent over £100 million on a "state-of-the-art construction that will house both youth and first team football...the complex will accommodate 400 young players, with classroom facilities for 200."

All of it sounds wonderful and exciting, particularly for a club as committed to becoming self-sustaining as City are.

City chief executive officer Ferran Soriano was quoted recently by Sky Sports about the club's efforts to reduce net operating losses with an eye toward Financial Fair Play considerations, noting that "we are second to none, our revenues will increase and we are not worried about FFP at all."

So City have a thriving developmental youth program, great training facilities and an apparently sincere interest in operating at a neutral cost basis (or as close to it as possible).

Ultimately, though, none of these elements are unique or all that special.
Being City under Sheikh Mansour's ownership means never having to worry about where the next Adnan Januzaj or Ravel Morrison is coming from.

Because, while it is nice to possibly develop a player like Jose Angel Pozo or Abdul Razak into a first-team choice, the truth is that City's stars have and will continue to come from the transfer market.

As long as City can afford to drop £38 million on Sergio Aguero and £27 million on Edin Dzeko and over £100 million on four players in one transfer window, City's next generation is always apt to be in some less affluent club's talent queue waiting to be bought.

When you can spend like City can, a concept like "the future" is time-warped. 

City live in the now in ways that clubs not backed by a sheikh's opulent vanity simply cannot afford to do.
Which is why City's next generation will very probably dominate Europe. Even if very few of that next generation begin their careers as Manchester City property.