The study, carried out by the Migration Observatory at the University of Oxford, found that British businesses had less access to the global talent pool because of the government's anti-immigration policies.
The Observatory's analysis of the UK's Labour Force Survey statistics revealed that the number of recent migrants from outside the European Economic Area (EEA), which includes countries like India, fell from 154,000 in 2011 to 94,000 in 2013, a decrease of 39 per cent.
"There has been a negative trend in this number since 2011, when policies to reduce net migration to the UK presumably began to have the bulk of their effects," the report said.
"The net migration target...Has clearly had a damaging impact on UK plc by reducing the talent pool available to companies based here," UK business secretary Vince Cable told The Financial Times.
"The harder we make it for international companies to employ the very best executives, the harder it is to sell the UK as a place to do business and foster employment opportunities," Cable added.
The latest Oxford study is likely to further intensify debate against the government's stringent immigration policy. Critics, including Cable, want foreign students removed from the general immigration figures.
"We want a country that succeeds in the global race, is able to attract the brightest and the best and I think you see that we are able to do that. To give you one specific example, if you look at sponsored visa applications for skilled workers in 2013/14 they are up almost 20 per cent on the previous year," Prime Minister David Cameron's spokesperson said.
"I think alongside controlling immigration you can, and we do...Compete to attract the brightest and the best," he added.
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