A really positive way to look at competition:
1. Every time you compete and win – you feel great and you feel like you’ve achieved something, especially if you’ve trained hard.
2. Every time you lose, you test your character and more importantly perhaps, you make someone else happy (see point 1.) It also makes winning feel ten times better the next time.

Competing in any sport is important, but I think especially for the majority of combat sports.  If you don’t compete then training effectively becomes the only place that you can test out your skills, and instead of going to training to learn and to try new things out, you’ll ‘play safe’ and tend to be more competitive.  Which is only going to manifest the ego, rather than allowing you to override it by putting yourself in bad positions, tapping when injury is likely etc.

I think it’s important in sport, and perhaps even in life, to lose any fear of losing, and being scared to have a go at something, if the risks aren’t too great.

Worse still, is being the kind of helmet that is too scared to compete, too scared to put anything on-the-line so to speak,but is a fantastic critic of those that do.  Definitely don’t be that guy

A final few thoughts:
Learning to deal with disappointment is important, competing as a team is great for friendships and bonding (even if you’re in a solo-sport, but have you’re training partners at an event) and competition gives your training focus and a proverbial kick up the backside, especially if it’s for boxing or MMA fight.