Competition can be taken to the extreme to where it is unhealthy....where you would do anything it takes to destroy your opponents and to win and to be #1 no matter what the personal cost is. Sure that is not conducive to personal growth, just as any obsession is to that degree. If you're gunning to be the BEST out there in the world, then be prepared to pay some heavy consequences in your pursuit to get there. There is a reason why some of the top people out there (celebs, $$'aires, athletes, etc.) achieve their top rankings, at a huge cost to their own personal lives.
However, I also believe that the "I don't have to compete at all by telling myself to just be my best" is what people who never won anything tell themselves as a form of self-validation to justify their low-level of achievement (wooooshhh....I'm ducking for cover for the gunfire that statement is sure to make

). Why is that? It's because any form of goal-setting has to be measureable and specific (
S.M.A.R.T Goal-setting). If you don't have known
external benchmarks to lock onto, then you're level of achievement won't be as high as someone who does have a quantifyable measure to rely upon. Competition provides a way of doing just that. You test your abilities against others who are doing the same and in doing so, you improve faster than ever before because weaknesses become visibly apparent where self-denial might have prevented you from seeing them before. Strengths are highlighted. Techniques are honed. In that very sense, true competition is all about personal development.
A example used previously is boxing. Now, a person can shadowbox and use speedbags by themselves all day long and benefit from the exercise, but in order to become the best boxer that one can be on a personal level, inherently it requires that the person actually box other proficient boxers...which means competition. The key, as was mentioned before, is having the
RIGHT MINDSET that is conducive towards personal growth rather than obsessive pursuit of one's own ego.
For example, I train in Jeet Kun Do and I fight in mixed martial art competitions, which compared to other sports is really a brutal, aggressive, and totally competitive environment. But my purpose in fighting is not winning or losing....it's about personal development because my main focus is not destroying the opponent at all costs, in fact, it couldn't be farther from that. Competition to me is about testing my abilities in a real world envrionment against other really good "experts" in the same field and if I win, great....gratifying validation that my training has paid off. If I lose, then it gives me some very valuable feedback about what improvements I need to make in my training to become better.
Self mastery is the primary focus of personal development and competition is a method for a person to achieve that level of mastery faster. It's simply a tool that's neither good nor bad and it's up to the operator of that tool to use in a way that is positive rather than negative.