There are a large number of countries that were once poor but have successfully developed to become middle-income countries. There are, however, only a handful of middle-income countries that continue to grow and become high-income countries. This chapter addresses questions of what is similar and what is different between the development of poor countries and that of middle-income countries. I argue that, generally, innovation is the key to upgrading the income status. I also argue that while imitation or learning from abroad is the source of innovation at the low-income stage, the development of innovation through their own efforts becomes the key to the continuous development of middle-income countries. This is because, as income rises, there is less scope for learning from high-income countries.