What is an 'Autonomous Investment'

An autonomous investment is an investment in a country that is made without regard to the level of economic growth.

BREAKING DOWN 'Autonomous Investment'

Autonomous investments include inventory replenishment, government investments in infrastructure projects such as roads and highways, and other investments that maintain or enhance a country's economic potential. They do not increase in response to increased growth in gross domestic product (GDP), or shrink in response to economic contractions, indicating that they are not motivated by profit, but rather by the goal of improving societal welfare. The 2009 American Recovery and Reinvestment Act (ARRA) provides many examples of autonomous investment.

Autonomous investments contrast to induced investments, which increase or decrease in response to the level of economic growth. Induced investments aim to generate a profit. Since they respond to shifts in output, they tend to be more variable than autonomous investments; the latter act as an important stabilizing force, helping to reduce volatility in induced investment.

Autonomous and induced investments can be thought of in terms of the marginal propensity to invest: the change in investment expressed as a proportion of the change in economic growth. When that marginal propensity is zero, the investment is autonomous. When it is positive, the investment is induced.

RELATED TERMS
  1. Marginal Propensity To Import (MPM)

    Marginal Propensity To Import is the amount imports increase ...
  2. Average Propensity To Consume

    The average propensity to consume (APC) refers to the percentage ...
  3. Average Propensity To Save

    The average propensity to save (APS) is an economic term that ...
  4. Economic Growth Rate

    An economic growth rate is a measure of economic growth, typically ...
  5. Golden Boot

    A golden boot is a financial package offered to encourage an ...
  6. Economic Conditions

    Economic conditions are the state of the economy in a country ...
Related Articles
  1. Investing

    California's DMV Just Dropped an Apple Bombshell

    Rumors have been swirling for some time that Apple was working to develop its own entry into the self-driving-car market. The California DMV provided the most concrete evidence yet.
  2. Insights

    Lyft Co-Founder Refutes Elon Musk's Vision of the Future (TSLA)

    In a Medium post on Sunday, Lyft Co-Founder John Zimmer argued for a driverless future with a Lyft network at the center of it.
  3. Tech

    Toyota Looks to Blockchain To Make Self-Driving Cars

    Is there no end to the uses of Blockchain technology?
  4. Investing

    IBM Patents a Clever Self-Driving Car Innovation

    IBM (NYSE: IBM) has received a patent on a new learning system that lets control of a self-driving vehicle shift between a human and an artificial intelligence-based driver in the event of an ...
  5. Investing

    Baidu CEO in Trouble for Testing Self-Driving Car

    The Chinese tech giant is being investigated: Its CEO tested a self-driving car on public roads.
  6. Personal Finance

    Aviation Experts Warn Self-Driving Cars to Stall (TSLA)

    After a recent crash of a Tesla in autopilot mode, many have come out to warn car manufacturers. Aviation experts are the latest to give firsthand advice.
  7. Tech

    Stock Market Too Optimistic About Self-Driving Adoption: Morgan Stanley

    MS analysts warn that investors are failing to recognize the many ethical and legal concerns threatening to slow down the adoption of autonomous vehicles.
  8. Investing

    Nvidia Forges Yet Another Self-Driving Partnership

    Nvidia adds Volvo and Autoliv to its long list of big name self-driving vehicle partners.
  9. Tech

    Regulators to Google: Robot You Can Drive My Car (GOOG, GOOGL)

    The National Highway Traffic Safety Administration (NHTSA) has helped resolve these concerns. In a letter to Alphabet's core Google division on February 4, the regulator stated that under federal ...
  10. Trading

    Ford Stock Could Break Out From 200-Day Moving Average

    Ford shares soared on strong F-Series demand and autonomous vehicle developments. Will the stock break through key resistance?
RELATED FAQS
  1. How is marginal propensity to save calculated?

    Find out about marginal propensity to save, what the it indicates about a household and how to calculate a household's marginal ... Read Answer >>
  2. Marginal propensity to Consume (MPC) Vs. Save (MPS)

    Learn the significant roles that the marginal propensity to consume and the marginal propensity to save play in Keynesian ... Read Answer >>
  3. In what manner will a recession likely affect the marginal-propensity-to-save rate ...

    Learn why recessions are often accompanied by an increase in the marginal propensity to save and whether this is a concerning ... Read Answer >>
  4. How do I negotiate a lower annual percentage rate (APR) with my credit card company?

    Discover the main factors of economic policy that, according to Keynesian economic theory, drive the marginal propensity ... Read Answer >>
  5. What impact does economics have on government policy?

    Learn about the impact of economic conditions on government policy and understand how governments engineer economic conditions ... Read Answer >>
  6. What Are the Best Measurements of Economic Growth?

    Learn how economists and statisticians track economic growth and why GDP might not be the best measurement of real economic ... Read Answer >>
Hot Definitions
  1. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  2. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  3. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  4. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  5. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  6. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
Trading Center