A large proportion of spaghetti Westerns were actually Hispano-Italian co-productions, shot first in the Monegros region in Aragón and later mostly in the Almería desert. From the late 1950s, the perceived decadence of Hollywood film and its production system, and the parallel rise of the European film industry after the postwar period, enabled European filmmakers to explore recognizable genres that could compete with American product. Examples of this were the sword-and-sandal epics of the early 1960s, filmed as co-productions among Italy, France, Spain, and even Hollywood. Production values were never very high, and they still required the presence of American actors (or at the very least Italian actors with English names), but still they succeeded in creating a substantial fan base.
The spaghetti Western can be seen as a further (and less short-lived) step along this line of evolution. Although early attempts to work on European productions of Westerns go back to the early 1950s, the film that pinned down the formula was Sergio Leone's Italian-Spanish-German co-production For a Fistful of Dollars (1964), starring an unknown actor named Clint Eastwood. Some of the main features are already here: Hollywood actors, violence, and an interesting use of music, lenses, and narrative rhythms. In many of these films, the co-production aspect was often merely nominal: at the time, funds were devoted exclusively to the development of international projects, and even with only small percentages of the budget, it was in the interest of producers to enter such productions. Although some key personnel came from Italy, most technicians and small acting parts were Spanish, which gave a centrality to the genre there. The Spanish spaghetti film industry peaked in the late 1960s, with emblematic actors like Fernando Sancho, Aldo Sanbrell, Frank Braña, and Antonio Casas. Spanish directors associated with the genre were the Balcázar brothers, Joaquín Romero Marchent, and Eduardo Manzanos, and even familiar names like Juan de Orduña, León Klimovsky, Ignacio F. Iquino, and José Luis Borau (who directed Brandy). The trend lasted well into the 1970s, when the success of the genre began to wane, having been replaced internationally by cheap horror thrillers.
Historical Dictionary of Spanish Cinema by Alberto Mira
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See Western All'italiana.
Historical Dictionary of Italian Cinema by Alberto Mira
Guide to cinema. Academic. 2011.