First, just a kind reminder. Colombia is spelled with an O. Thus Colombia, not "columbia". This is a common mistake though.

As for your question the large influx of dollars into the Colombian economy strengthen the peso which affected many sectors of the export economy.

Suffice to say that the expenditure of drug cartels stimulated somehow the local economy since they would buy goods and services such as cars, real states, store fronts and would set up legitimate businesses, as a way to launder money and diversify their assets. Examples of cities that saw rapid economic growth would be Medellín and Baranquilla. Bogota itself didnt see such growth even though it was obviously affected by the size of the illegal industry. It could be said that the illegal drug trafficking did not have such an important role or sway in the Capital’s economy as it did in the other two large cities I already mentioned.

However even the influx of large quantities of capital into private enterprises (in the form of stuck buying) and construction projects (mansions, clubs, hotels, restaurants, airstrips, clandestine ship yards) ended up in the long run affecting negatively the economy. Colombian economist have compared the large influx of capital due to drug money to the “Dutch malice” or “Dutch disease”. This business often times did not pay taxes, strengthened the local currency which made it harder to sell exports products in a largely (at that time) agrarian nation, and eroded business practices and confidence in the government as very negative intangibles.

I will post part 2 in a bit.