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Teshome Gabriel has identified three types of films that have emerged from Third World countries: (1) assimilationist films that are closely identified with Hollywood in their focus on entertainment and technical virtuosity and de-emphasizing of local subject matter (e.g., the exoticism of the Amazon region in the Brazilian state-sponsored international hit Bye Bye Brazil [Carlos Diegues, 1979] or the Bollywood entertainment films in India); (2) remembrance films that feature local control of production and local culture and history as their subject matter, but tend to romanticize the past while neglecting social transformation (e.g., the New Indian Cinema films of Satyajit Ray such as PatherPanchali, 1955, with its nostalgia for a disappearing rural life, and Algerian freedom fighter films such as Ahmed Rachedi's Dawn of the Damned, 1965, with its relating of the Algerian war from the perspective of Third World struggles); and (3) combative films that place production in the hands of the people (instead of local elites) and use film as an ideological tool.

These combative films have formed what is known as the Third Cinema, taking its name not from its location in Third World countries but as an alternative to both a Hollywood unable to treat local social issues meaningfully because of its preoccupation with spectacle and globalization, and an auteurist European cinema focused mainly on the unique visions of its creators instead of the concerns of the people. Focused on complex, collective truths specific to particular places, the Third Cinema features an intricate interaction of diverse cultural traditions, countering monumental notions of national and personal identity, whether they be imposed by outside imperial forces or generated from within. Rooted in Marxist aesthetics generally and, in particular, the socialist sensibility of Brecht's theater and the British social documentary developed by John Grierson, as well as post–World War II Italian neorealist feature films, Third Cinema films go beyond these predecessors to call for an end to the division between art and life and to insist on a critical and intuitive rather than a propagandist cinema, attending to both social situations and historical processes in order to produce a new, emancipatory mass culture that is itself always in process.

Given their geographical and historical specificity, Third Cinema films do not conform to any one aesthetic strategy but instead employ (in any combination) whatever formal techniques—mainstream or avant-garde—that suit the subject at hand. The result is unique configurations of space and time, grounded in radical approaches to filmmaking. Often, directors and actors are not full-time professionals and discourage individualist obsessions with craftsmanship and place more emphasis on the viewers' role in creating the film, inviting them to explore the spaces between representation and reality and become producers rather than consumers of culture.

The development of the Third Cinema began in Latin America in 1967 with the strong anti-colonial emphasis at the First International Festival of Latin American Cinema and the release of the Argentinian documentary (and accompanying manifesto, “Towards a Third Cinema”) The Hour of the Furnaces (Fernando Solanas and Octavio Getino, 1968), a radical and controversial rendering of Argentinian history in the 1960s and 1970s. This anti-colonial approach then became less doctrinaire in feature films such as Chilean Raúl Ruiz's Three Sad Tigers (1969), which provided a variety of options for social change in its examination of the Santiago underworld through a single handheld camera, emphasizing the city's atmosphere of entrapment. The Third Cinema approach spread worldwide through international exposure, especially in Europe, overcoming the obstacles of dictators and state sponsorship in the 1970s while remaining grounded in the principle of mestizo/a essence developed by Che Guevara.

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