It's funny that no one is even noticing that if the Oscars follow the Golden Globes, Slumdog Millionaire will be the closest we've come to a foreign film winning the best picture Oscar.
Slumdog Millionaire was filmed entirely in India, directed by a British director (and co-directed by an Indian director), and is half-English, half-Urdu. It also utilized an entirely foreign crew and its subjects are foreign. The only non-foreign element at play is that it was produced by an American company, Fox Searchlight.
We've traditionally had easier defined boundaries between a foreign film and a non-foreign film, but in this globalized era, ownership of a movie by a single country is a little harder to define. The best directors in the world such as Brazilian Fernando Meirelles (City of God), Chinese director Ang Lee, and Mexicans Alfonso Cuaron (Y tu Mama Tambien), Rob Rodriguez (El Mariachi), and Alejandro Inarritu Gonzalu (Amores Perros) have eventually used their money to come to Hollywood and made English-language films with American actors. When Alejandro Inarritu Gonzalu won the Golden Globe for best picture with Babel, he suggested in his acceptance speech that his film was a true global picture that belonged to the people and crews among three different continents.
Experimentation works both ways however. In 2006 (2007 was technically when the ceremony was held), two of the five directors nominated for best foreign-language film, Mel Gibson for Apocolypto and Clint Eastwood for Letters of Iwo Jima, were American. Woody Allen who has had a decades-long love affair with New York, packed up shop and moved to London recently for the filming of Match Point.
The spread of filmmakers and film making ideas across borders, however, has been going on forever. And the American film industry would never have eclipsed the emerging film industries in France, Italy, and Russia if it weren't for the contributions of foreigners. In other words, this has been going on forever. Most of the great American directors from our Hollywood Golden age have come from other countries, Billy Wilder came from Austria, Otto Preminger and Ernst Lubitsch came from Germany, and Frank Capra came from Italy. This was all the more ironic considering that Frank Capra's film exemplified the ideals of Americana better than any other filmmaker to this day. He made the quintessential film about how good triumphs over evil if our constitution is enforced in "Mr. Smith Goes to Washington." With the exception of Frank Capra, however, these directors were Jews who were persecuted in Nazi Europe so were exiled to America. Directors who weren't forced out of their homeland tended to stay in their own countries and made films in their own languages. Even our two biggest directors of the Golden Age of Hollywood, Orson Welles and Alfred Hitchkock were influenced by the German film industry. Alfred Hitchkock interned (yeah, like college internship) with the German film industry before working in the British film industry, and Orson Welles used a German cinematographer, Greg Tolland (Tolland worked with another of other American directors as well).
More recently, Czech director Milos Forman (One Flew Over the Cuckoo's Nest, Amadeus, The People vs Larry Flint, Man on the Moon) one two Oscars and because he had made some films in Czech, he technically was the first non-English language director to win an Oscar. At the same time, most of his filmography (or at least the films he's famous for are American) is American. In 1987, "The Last Emperor" won best picture and might be considered the first foreign film. The film, about the exiled Emperor of China, utilized Japanese and Mandarin in its dialogue in addition to English and was filmed in China. It was was directed by Bernardo Bertolucci, an Italian director who had made his name in Italian-language films and earned him a best director nomination. The film was bankrolled by a British studio.
It's important to clarify here that British films aren't really considered foreign films. It's not just because of the similar language but because the flow of actors between both countries are pretty interchangeable. British directors David Lean and Oliver Reed have won Oscars for their entirely British films and many found it somewhat curious that the American film institute listed Lawrence of Arabia as the 5th best American film ever made when virtually no part of the production had anything to do with America. David Lean is, after all, is a British institution. Even more curious, the British film institute's list of 100 Greatest British films of all-time has entries which are decidedly Un-British. There is a such thing as a British film industry and certain films like the Bond series, the works of David Lean, Oliver Reed, and Richard Lester, The Red Shoes, Room with a View, etc. are considered quintessentially British films. The British Film Institute's list, however, included films such as Shakespeare in Love or Braveheart, whose only qualifications are that the films are set in Britain and revolve around British history. If we take this definition of where films are set and to what degree they revolve around the country's history and culture, then surely Slumdog Millionaire is foreign because it is a landmark film in presenting images of Indian modern-day life to audiences in the UK and US who knew very little about it.
My vote is that Last Emperor is foreign, Bernardo Bertolucci was the first foreign director to win an Oscar, and that Slumdog Millionaire will be #2. What's yours?