As the creator of Amores Perros premières his latest film at the Cannes festival, Jason Wood argues that Mexican cinema has finally hit the big time

When Babel, the latest offering from Alejandro González Iñárritu, premières at the Cannes Film Festival this month, it will be a remarkable moment for Mexican cinema. Before 2000, when the director's debut, Amores Perros, took Cannes by storm, Mexican films were rarely seen by international audiences. This year, one of Babel's main competitors for the Palme d'Or will be Pan's Labyrinth, by González Iñárritu's compatriot Guillermo del Toro. That two Mexican films are competing for the most prestigious prize in world cinema is a measure of how far the Mexican industry has come in the past six years.

Amores Perros had a seismic impact in its homeland. A structurally and aesthetically audacious film, woven from three separate stories and spanning the social strata of Mexico City, it was nominated in the Best Foreign Film category at both the Golden Globes and the Oscars, and eventually accumulated more than 30 international awards.

The film appeared at a time when home-grown cinema in Mexico was struggling to establish itself in the face of the Hollywood imports that dominated the country's multiplexes. However, it would be a mistake to think that Amores Perros emerged from a vacuum. Mexico has a long and proud history of film production dating back to the end of the 19th century, when the nation was prosperous and politically stable. The projectors and pioneering films produced by the Lumière brothers in the 1890s were available in Mexico only a few years after they became popular in Europe.

One early innovator was an engineering student called Salvador Toscano Barra-gán, who opened Mexico's first film salon and produced several silent movies, or "entertainments", depicting momentous events such as the opening of railway lines and presidential excursions. By 1900, cinema was well established within Mexico as a popular art form, and in 1907 Felipe de Jesús Haro produced the country's first major feature film, El Grito de Dolores. But as Hollywood became the dominant force in cinema during the 1920s, audiences began to turn away from locally produced films in favour of big-budget imports. Mexican stars such as Delores del Río and Lupita Tovar emigrated to the United States.

Alejandro González Iñárritu has firmly rejected this tendency. When Amores Perros first hit the screen, the director was explicit about his desire to address issues relating to Mexican identity, explaining: "We want to see ourselves reflected . . . to show the complex mosaic of an enormous city such as Mexico and make it like an anthropological experiment."

He was not the only one. Despite the unfavourable economic conditions and a government reluctant to provide structural and financial support for the arts, a series of international hits by Mexican directors quickly appeared in the wake of Amores Perros: Alfonso Cuarón's Y tu mamá también, Carlos Carrera's El Crimen del padre Amaro and Carlos Reygadas's Japón. Cinema critics began to refer to the surge of activity as a buena onda, or new wave.

This generation of film-makers was not interested in producing local variations of American genre pictures. With access to a new class of entrepreneurial private investors and producers, they were financially autonomous from the government, and this gave them formal and ideological liberty. No subject was taboo, no narrative too complex in the search for an authentically Mexican means of expression.

Given this sort of commitment to Mexico's heritage, it is perhaps a paradox that many of the directors associated with the buena onda have since chosen to work in the US. González Iñárritu's second full-length film, the searing 21 Grams, was shot in Memphis with a cast of Hollywood stars including Sean Penn and Naomi Watts. "I think that a country is not a piece of land or a flag," González Iñárritu has said. "A country is an idea that can be ex-pressed through images, words and other forms of expression. I feel very proud to be part of the community of world cinema and to tell whatever story I want to tell in whatever country."

Babel, which will go on general release in the UK late this year or early in 2007, is another international effort. Set in Morocco, Tunisia, Mexico and Japan, it features favourites of González Iñárritu, including the actor Gael García Bernal and his writing partner Guillermo Arriaga, as well as two established Hollywood stars, Cate Blanchett and Brad Pitt. Whether it carries off the coveted Palme d'Or or not, it will be fascinating to see this latest milestone in the career of Iñárritu, one of the most distinctive and original directors at work in contemporary cinema.

The Faber Book of Mexican Cinema by Jason Wood will be published by Faber & Faber in September (£15.99)

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