Wenger, 65, says society in Europe has become "softer" compared to Latin America and produces different players.
Sanchez, 25, has scored eight goals in 15 appearances since joining Arsenal.
"When football is more formalised, it's less about developing your individual skill and fighting attitude. We've lost that a bit," Wenger said.
"Maybe it's because in Europe street football has gone. If you go back 30 or 40 years in England, life was tougher."
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Sanchez, who cost Arsenal £35m when he signed from Barcelona in July, has fighting qualities and skills which Wenger claims South American strikers hone on the streets.
"We're much more protective and have all become a bit softer," Wenger said.
"In street football when you're 10-years-old, you want to play with 15-year-olds. Then you have to prove you're good, you have to fight and win impossible balls."
The Frenchman admits Sanchez's determination on the pitch is reminiscent of Arsenal's fabled defence of the 1990s when he first took over at the club.
Wenger added: "He reminds me of the first generation of English players that I had - Lee Dixon, Steve Bould, Tony Adams, Nigel Winterburn, Martin Keown. This kind who is just ready for the fight."
Arsenal boss Arsene Wenger believes the decline of street football means Europe struggles to produce top quality forwards like Chile's Alexis Sanchez.