Capital account liberalization is often being regarded as an important way in order to promote economic growth both in industrialized and developing economies. Some results provided conflicting evidences on this issue. In order to provide an explanation for this empirical ambiguity, this paper fills the void in examining this impact on economic growth using foreign direct investment (hereafter FDI) and portfolio investment (hereafter PI). The relationship between FDI and PI hasn’t been received considerable and growing attention in development literature and hasn’t been extensively investigated in empirical literature by researchers for both developed and developing countries. Each is broadly thought to affect economic growth positively through facilitation of knowledge and technology transfers. Our empirical study is based on a sample of 100 developing and developed countries over the period 1990-2009 reports the followings results: the estimation results seem to suggest a statistically significant and positive relationship between FDI and output growth when using GMM, WG and GLS estimators related to pooled, developed and developing countries. Also, we found the coefficient of PI is negative and not statistically significant in developing economies. However, this coefficient is positive and significant in developed countries when we use the GMM estimator. In the same countries, when we include the random effect in the specification, the coefficient is still positive but not statistically significant. In all countries, the coefficient of PI is negative and significant.