I think you've missed an important point here. They were developing multiple aircraft, and picking the best. They weren't putting all their eggs in one basket.
Despite being a Communist country, the USSR followed the "capitalist" practice of having competing design bureaus, which did no manufacturing. A winning design was turned over to a manufacturing plant. As a result, they developed some excellent aircraft.
The F-16 came as a result of a competitive flyoff. We haven't done such a flyoff since then. The F-22 and the F-35 were selected on the basis of a paper competition.
For better or worse, the F-35 will be produced and declared "operational." There are too many careers and egos invested in it to back out of what may have been a bad decision.