Disproportion in the level of economic development is more of a historical fact than a recent phenomenon. The empirical analysis in this study, based on ten selected countries, six of which are the high-income and innovation leaders and four middle-income countries (of which one is the regional innovation leader), shows that in the last decades, the income gap has increased in absolute terms while decreasing slightly in relative terms. The income gap (absolute) increased less for middle-income countries ranked as more innovative. This study investigates whether the difference in knowledge becomes a more relevant determinant of income convergence than capital growth. This study’s empirical analysis is based on two samples. To evaluate the impact of innovations on economic growth and income convergence, we used a sample of ten economies, which were grouped into two categories (high-income and middle-income), and compared their average income over time. It spans the period from 2004 to 2023. The income gap between the two groups of countries has increased from 41,330 (constant 2015 US$) in 2004 to 49,989 (constant 2015 US$) in 2023. If we compare individual middle-income countries with a group of high-income countries, we see that the gap has increased less in those more innovative. The analysis also shows a strong positive relationship between the average value of four Global Innovation Index components (Human capital and research, Business sophistication, Knowledge and technology outputs, and Creative outputs) and GERD per capita. Based on an evidenced positive relationship between innovativeness and expenditures for R&D, we estimated aggregate production function on a sample of 35 European economies from 2000 to 2023 (annual data). Estimation shows that gross fixed capital formation growth of 1% leads to output growth of 0.32%. Employment growth leads to output growth of 0.214% and R&D investment growth of 0.157%. Growth in other exogenous factors (TFP) contributes to output growth by 0.02%. The estimation results show a highly positive impact of expenditures on R&D on economic growth. The country’s educational outcomes strongly determine research and innovative activities, especially regarding science education. Observing the strong relevance of the expenditures for R&D and the innovative potentials for economic growth, what are the options if a country cannot provide innovative growth internally? Technology transfer is one possibility, therefore, less innovative countries should encourage and support technology transfers through FDI or other forms to narrow the knowledge and income gap if they cannot increase R&D investments.