Balayev was born on November 19, 1956 in Baku, capital of Azerbaijan. In 1980, he graduated from the Department of History of the Azerbaijan State University and in 1982 he started working at the Archeology and Ethnography Institute of the Azerbaijan National Academy of Sciences. In 1983-1985, Balayev was a researcher at the Ethnography Department of Moscow State University. From 1985 he continued his doctoral studies at the Ethnography Institute of the USSR Academy of Sciences in Moscow, graduating with a PhD in History in 1988.