Germany was in almost this exact situation. It was a self-perpetuating machine for centuries, where ambitious students came to study under the best professors, leading to top students, many of which stayed at those universities to become top professors themselves. Then WW1 put a bit of a damper on that, and the 1930s and 1940s broke it. Germany is still not insignificant in science, but really a shadow of its former self

And that was despite putting an emphasis on education, and the 1930s and 1940s having a lot of science funding. Remove the people and the flywheel stops