Education systems are required to train human capital on skills befitting knowledge-based economies. This calls for innovative systems in education to meet the ever-increasing demand for skilled workforces in these economies. Education systems should enhance quality in teaching and learning processes and prepare future citizens for life and work through innovative policies. In education systems, higher education may be more innovative than primary and secondary education levels as higher education is at the center of education and research focusing on innovation and creativity. In this regard, institutions of higher education encounter innovation trends and challenges in the era of the knowledge-based economy. Innovation trends are currently climbing upward and are mainly driven by factors such as the need for automation, globalization, and competitive waves of change. Economic development with regard to these innovation trends is closely associated with countries’ ability to produce, acquire, and apply technical and socioeconomic development. The main challenges lie in the rate at which countries are advancing vis-à-vis social development trends. The Social development trends do not seem to match up with the speedy onset of global acceleration, the processes in developing and developed countries, and economic imbalances that occur within the developed world itself. There are implementation difficulties regarding innovations as well as selecting the relevant innovation to apply in some contexts. Adoption of innovation is another challenge, especially when it comes to changing mindsets toward innovations like technology in education. This applies to the developing world as well as to infrastructural impediments common in the African and other developing economy contexts, such as Turkey. To overcome these challenges, research-intensive universities could promote research and innovation. Some examples of innovation in education include e-learning, audio-media usage for distance learning, online education, MOOCs, blended learning, and information communication technology utilization. Teachers should be trained as competent users of these innovative technologies to initiate and sustain innovation in education. Once harnessed, educational innovation could catch on rapidly and improve service delivery in educational institutions. Developed and developing countries should work together to foster and mass produce these technologies in higher education institutions.