They aren't (at least when allowed to). They surpass business for pure R&D, which the private sector then leverages with applied research as a follow on (think the internet, MRIs, nuclear energy, the concept of componentization in manufacturing, AI (yes, AI), semiconductors, GPS, the flu vaccine....). The trope that gov can't innovate is one of the most pernicious and mendacious used by the enshittification/financialization class on everyone else.