Autonomous Investment


DEFINITION of 'Autonomous Investment'

Expenditures in a country or region that is independent of economic growth. They are investments made for the good of society and not for the goal of making profits. Autonomous investment is the opposite of induced investment, which is not mandatory or compulsory.

BREAKING DOWN 'Autonomous Investment'

Autonomous investments include inventory replenishment, government investments on infrastructure items, such as roads and highways, and other investments that keep the economic engine running.

According to the accelerator effect, the amount of investment is directly related to changes in the Gross Domestic Product (GDP) of a country. Not surprisingly, this "induced investment" is highly volatile, but its volatility is reduced by autonomous investments, which provides stability to the economy - at least in theory. The American Recovery and Reinvestment Act of 2009 (ARRA) provides many examples of autonomous investment.

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