The report said academics were leaving Germany at ever-increasing rates for nations willing to pay more generous salaries, adding that German institutes do not have enough money to attract top overseas names as replacements.
Few German professors earn more than $70,000 a year.
In his annual review of the state of German research, professor Hubert Markl, president of the prestigious Max Planck Society, said the brain drain was starting to have economic effects on the country, particularly in information technology.
The rigid German academia frustrates bright young people, who are rarely able to break free into their own research until they are in their early 40s, the report said.
Earlier this year, German Chancellor Gerhard Schroeder said he was inviting 20,000 computer experts from India, Pakistan and eastern Europe for five years each, under special visa rules, to help fill the skills gap in Germany. Few so far have taken up the offer.
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