SAN SEBASTIAN — The state of Latin America’s film industry is not what it was.

No, señor: Compared to even just a decade back, most ways you take it, it’s now much better.

From Monday thru Wednesday, a posse of Latin American producers, state agency toppers – powerful kingmakers in Latin America, as in Europe – distributors and directors will gather in San Sebastian, with the second Europe-Latin America Co-production Forum, a 16-project pitching meet, and 24th Films in Progress, a six-pix-in-post showcase, unspooling in parallel.

Meanwhile, a near dozen or so Latin American films play main fest sections: Fernando Eimbcke’s competition contender “Club Sandwich,” repped by Funny Balloons, Fernando Coimbra’s “A Wolf at the Door” and Marc Silver’s “Who Is Dayana Cristal?,” both sold by Mundial; Mexico’s Oscar submission, “Heli,” from Amat Escalante; “Anina,” a Colombian-Uruguayan toon hit;  Chilean Rojas Valencia’s “Root,” Caru Alves Souza’s “Underage” and Victoria Galardi’s “I Thought It Was a Party.” Save for “Heli,” all are European or world premieres.

The success of what in all effects is San Sebastian’s Industry Days depends not only on the quality of the movies unveiled – though that’s a big consideration – but what the companies behind them can bring to the table.

That, these days, in a big step-up on early last decade.

“I studied cinema in Peru and at the time Latin American cinema meant only Argentina, Brazil and Mexico. These were the only countries where you could find interesting filmmakers with an international appeal,” Films Boutique’s Jean-Christophe Simon recalled.

“What’s really exciting is to now see that you have talented filmmakers and producers coming from Chile, Costa Rica, Uruguay, Colombia.”

Meanwhile, funding has ramped up across Latin America.

Exhibit A: Brazil. It now disposes of about an annual $200 million in subsidy funding – double-and-more Spanish state financing – plus, to boot, $80 million in tax incentives, per promotion org Cinema do Brasil.

Producers are plunging into international co-production, with the U.S. (Mexico, Colombia), Europe (most elsewhere), and, as European coin edges down, within Latin America itself.

Over 2008-12, Brazilian partnered in 78 official co-prods, per CDB prexy Andre Sturm said.

That’s way up on the first half of last decade when it was lucky to link with overseas on three-to-four films a year, he added.

Film authorities have multiplied co-production treaties and launched bilateral co-prod funds, Brazil with Argentina, Portugal and Uruguay.

Traveling to major fests and markets, in trips facilitated by national film agencies, a new generation of more entrepreneurial producers has learnt the virtues of co-production, building co-production networks.

“Latin America is beginning to re-consider the creation of a ‘region’ to exploit our films,” said producer Bruno Bettati at Jirafa Films.

“Producers themselves are attempting to improve sales in Latin America. Latin American production partners, as well as sales agents attempting to build ‘Latin American slates,’ certainly help,” he added.

A remarkable young generation of new directors has broken through throughout Latin America, broadening filmmaking options way beyond the predominantly social-issue base of past generation, at least as its films were known abroad.

Thanks to digital, “Latin America has seen a huge technological change and, as a direct consequence of that, the proliferation of filmmakers who with digital formats have been able to make films from an early age,”  Constanza Arena, head of the Chile promo org CinemaChile, commented art San Sebastian.

The diversity of Latin American cinema is now dizzying, and far closer to the more-mature industries of other regions.

San Sebastian’s Horizontes Latinos, for example, frames animation (“Anina”), two mother-son relationship dramas (“Underage,” “Raiz”), a femme friendship dramedy (“I Thought It Was a Party”), a family-set coming of age tale (“So Much Water”), an investigative docu (“Who Is Dayani Crystal?”) and a dryly humorous tale of two put-upon employees (“Workers”).

Two more movies – “Wakolda” and “A Wolf at the Door” – are very different chilling thrillers.

Societal concerns remain, but are approached through more personal character-driven stories (“Heli,” “La jaula de oro,” or, for that matter, “Paradise,” in San Sebastian’s New Directors section).

“The film is a fiction. It’s about characters, a family that is destroyed by the violence and attempts to rebuild. Mexico’s drug wars is just the context,” director Escalante told Variety after “Heli” was named Mexico’s Academy Award submission last Wednesday.

“A previous generation focused very much on realities such as social injustice, which are still very important to talk about,” said Chenillo. But “The young generation I grew up with has allowed itself to film very personal concerns, their infancy, parents, where they grew up.”

Select Latin American movies are also acquiring a new ambition and scale: “Foosball” is budgeted at $21 million, producer Jorge Estrada said at San Sebastian.

Edgar Ramirez starrer “The Liberator,” which world preemed at Toronto, is budgeted even higher.

“Amazonia,” which closed Venice and opens Rio Festival Thursday, was “almost six years in the making, shot over three years entirely in the Amazon, and with animals for all the characters and 18 months of post-production,” said producer Fabiano Gullane, who described it as “the biggest challenge in my life.”

“In the last few years we have seen a huge spike in the number and quality of genre films coming from Latin America,” said Canana’s Pablo Cruz, in San Sebastian for the Mundial-sold “Paradise,” “Wolf” and “Dayani Cristal,” announcing Austin’s Fantastic Market, which ran last weekend.

December’s Ventana Sur, Latin America’s biggest meet-mart and a partner at San Sebastian’s Co-production Forum, announced at Cannes a Blood Window genre market, including co-production pitching and a Bloody Work in Progress, with productions chosen by San Sebastian director Jose Luis Rebordinos.

“The market is still limited for some titles which are mostly fit for festivals circuit,” said Simon. “But the line-ups of distributors and TV’s are more and more open to Latin American titles every year: The market is slowly but surely growing.”

Challenges do, however, remain.

Only Brazil boasts domestic market shares that punch regularly above 10%.

Said Arena: “The whole of Latin America is faced by the challenge of its national cinemas finding a public.”

“We lack new, young, enthusiastic distributors who will fight to improve the diversity of films available in every Latin American country,” Bettati argued.

For Simon, “probably the next step to enlarge the market would be to have more films with internationally-known Latin American casts. With five Garcia Bernals more, Latin American Cinema could be on top.”

That and other issues will be discussed at a San Sebastian Europe-Latin America Co-production Forum round table on Tuesday, “Spanish-speaking Films in the Flow of International Sales.”

Panelists lined-up are Wild Bunch’s Vincent Maraval, Funny Balloon’s Peter Danner, Sam Eigen at Shoreline Ent., Action Inc.’s Setsuko Higa, and Latido Films’ Silvia Iturbe.