President Obama in a joint press conference on Monday in the capital, Addis Ababa, urged East Africa's most populous country to curb its crackdown on opposition members and limits on press freedom.
"We had a frank discussion, in a global economy increasingly driven by technology and the internet, continued growth in Ethiopia depends on the free flow of information and open exchanges of ideas." Obama said.
"I believe that when all voices are being heard, when people know that they are included in the political process, that makes a country stronger and more successful and more innovative." Obama added.
Hailemariam Desalegn, the Ethiopian Prime Minister, whose government swept all seats in May's disputed parliamentary election, attempted to counter the criticism of his government.
"Our commitment to democracy is real and not skin deep," he said. "This is fledgling democracy, we are coming out of centuries of undemocratic practices," he added.
Ethiopia's ruling party, in power for a quarter of a century, has turned the once famine-stricken economy around.
Ethiopia contributes troops to an African Union peacekeeping force battling al-Shabab in Somalia. The group has often launched attacks in Kenya, but diplomats say Ethiopia's state security apparatus has spared it similar assaults.
Obama will hold talks with regional leaders about the conflict in South Sudan late on Monday. Warring factions have ignored pressure to end fighting, and talks may consider possible sanctions if a mid-August deadline is not met.
