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Giving out an award to students who have achieved something is a great idea in order to promote competition, as well as make them feel like they can achieve something if they work hard. Students need to be taught very early that their actions can have an effect on how they will do in life and the harder the work the more they will achieve. Competition is a big factor in life and there is no place to start being competitive than in your years at school.
Besides the fact of colleges expenses, if high school diplomas weren't such a huge deal to earn, I think kids would want to earn that college diploma, and by making it a huge award to get the high school diploma kids feel satisfied with how they have done, and that they don't need to work harder, because they have done just enough to graduate and earn the award. With that point in mind, many children already do the bare minimum to get by, so with awards being a huge deal kids might work harder, but they will stop as soon as they earn what they were after, even if they can do so much better.
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Award does not invoke the spirit of learning. Students quest for it only to achieve it but never ever try to master the discipline in which he is competing. It may bring laurel to one or two but frustration and humiliation to many. Thus, in no way it could be said that awards promote competition.