This might be the best performing failure of a relatively modern fighter. It was developed by Northrop in the 70's to be used as a cheap export fighter. At the time the U.S. wouldn't allow the export of current gen front line weapons systems. Northrop developed this based on their existing F-5 with an eye towards exporting it. Before any sales could be finalized the U.S. changed their policy and allowed the export of the contemporary F-16.
The F-20 was developed in response to the FX program initiated by the DoD. The FX program was intended to develop high performance aircraft for friendly nations that would be capable against front line Soviet aircraft but would exclude sensitive technologies to prevent them from possibly falling into Soviet hands. Performance of the F-20 compared favorably to the performance of the F-16, but the cost to purchase and maintain the F-20 would have been significantly lower due to the lack of sensitive technology. Even with the simplified technology present the F-20 was capable of carrying most current U.S. arms and was capable of beyond visual range air combat with radar guided missiles. It was also capable of delivering air to surface payloads like the AGM-65 Maverick in addition to unguided bombs.
The combination of changing market conditions, competition, politics and a screwed up sales channel combined to do in the F-20. The planes development was fully funded by Northrop. But sales could only be handled by the State Department, whom by the time the F-20 would have been ready for sales was able to sell the F-16. Since the Pentagon was also buying the F-16 it was in the governments interest to sell F-16's as that would drive the per unit cost down making it cheaper for their own F-16 purchases. To make a long story short, Northrop spent in the neighborhood of $1 billion dollars to develop an airframe that they were not allowed to market themselves. Since the State Department and Pentagon had no incentive to sell the plane it ended up being a total failure with only the three development copies being built.
It is a shame that this ended up being a failure as it was a very capable and affordable fighter. Plus in my opinion it is one of the best looking jet fighters ever. It just has classic proportions and such sleek lines. All photos from here, where there are many more.